The cryptocurrency market was born in 2009 after the launch of a project called Bitcoin (BTC).
A cryptocurrency is a decentralized digital currency of cryptocurrencies that can be transferred from one type to another.
Since the launch of Bitcoin, many virtual currencies known as altcoins have been created and entered the market. Besides Bitcoin, the other major currencies are Ethereum (ETH), Litecoin (LTC), Ripple (XRP), Bitcoin Cash (BCH).
With so many cryptocurrencies on the market, it is difficult for investors and traders to choose which coin to trade.
The decision problem is made more difficult by new market entrants who tout their coins as the next Bitcoin. Below are some tips that will help you choose the best cryptocurrency to trade.
Choose your risk level
With more than 2,300 cryptocurrencies on the market, Bitcoin is the most volatile and secure. Investing in BTC is seen as a safe investment because it is the oldest on the market and priced below its high of $20,000.
The other cryptocurrencies are referred to as “altcoins” with ETH, LTC, and XRP being established and stable cryptocurrencies.
It is advisable to spread the risk by diversifying your investment. To strengthen your investment portfolio, you may need to invest in one or more stable digital currencies.
Check it out: Best trading bots for trading Bitcoin and altcoins → Auto Trading
Stablecoins are designed to mimic fixed currency. They keep price fluctuations to a minimum and are a good way to park your money in a Cryptocurrency Exchange.
Do independent research
While listening to a company’s representatives and their informed opinions is important, there’s no better way to make a decision than doing your own research. Before deciding to trade BTC/USD vs ETH/USD or any other cryptocurrency, take a look at its historical charts.
The areas to watch should be circulation and market capitalization. While price is important, it is not something to remain reclusive about.
Look for stability and dig up the complete history of a cryptocurrency. A digital currency may still be in its growth stage and may show a record of continuous growth.
On the other hand, it may have a history of large spikes and large corrections. Avoid coins that have experienced large drops in their market cap. This is an indication of dying demand.
Find out as much as you can about the company offering the cryptocurrency and the problems it aims to solve.
Look for offers that have innovative technology and strong theoretical backing. Research the company’s leadership, technical team, and CEO’s track record.
Read Also: Best platforms to buy cryptocurrencies
Stay alert for possible ICO offerings
Initial Coin Offerings (ICOs) are the preferred method for digital currency companies seeking working capital and launching new cryptocurrencies.
Similar to the stock market, it involves staking on the company that can deliver the result and gives you return on investment.
When choosing which cryptocurrency to invest in, ICOs present you with a great opportunity. At its core, you don’t have historical charts to guide you. Therefore, you need to rely on your understanding of the offering, what makes it stand out in the market, and the team behind the offering.
Since you’re starting from scratch, investing in a good ICO will help you make big profits. To help you identify the next profitable ICO, analyze past successful offerings and keep up with recent industry trends.
Analyze Unknown Cryptocurrency Exchanges
If you missed an ICO, you have the chance to buy the coins on cryptocurrency exchanges. Most well-known and established exchanges limit the coins they trade. You’ll likely find a better investment on lesser-known platforms.
To protect your investment, do independent research on the exchange and the people who run it.
Check it out: Best Cryptocurrency Exchanges to Trade with Low Fees
Be alert and vigilant
Choosing which cryptocurrencies and altcoins to trade can be a daunting task. Sticking to the facts and not making emotional decisions will help you select the investment that is right for you.
Once you’ve selected the currency you want to invest in, stay alert and monitor your portfolio closely. Stay up to date with all the developments related to your investment and continue to conduct the same independent research you did before investing.
No Loss: Most profitable coins to mine
Altcoins may not experience the same rapid growth as Bitcoin, as some are in a growth season. However, choosing the right cryptocurrency to invest in can lead to profitable returns.