Investing in cryptocurrency is, on the whole, not regulated like conventional financial products and the stock markets. Before you pick your best crypto to buy, take care to do your own research and due diligence for every project, as well as your own crypto investment strategy.
Long-Term Potential
If you are looking for cryptocurrencies to invest in for the long term, rather than making a quick buck trading or on a pre-sale, there are two main features of a coin to investigate. Firstly, is the coin a potential asset or store of value, like gold? Does the coin have scarcity and demand, and is it likely to appreciate in value? Bitcoin, for example, is viewed much like gold as it has higher scarcity than other coins. Many investors hold the asset, hoping to gain over time.
The second characteristic to look for to assess long-term potential is the utility of the coin itself or the technology it powers. A good example here is Ethereum, as ETH powers the network, and the network’s smart contract technology is immensely popular with dApp and enterprise developers.
Short-Term Potential
If you are looking to make a quick buck or two with a short-term investment, you could be looking at projects in their early or pre-sale stages that are likely to see their native coins rocket in price once they are listed on exchanges. This can be a risky strategy as projects can fail or prices flop, and there are many scams, so the trick is to identify the right project.
Existing projects developing new technologies or launching new NFT collections, on-chain games, and other innovations can also serve to take a coin that has been stagnant in value into sudden new heights.
Crypto Presale
Before buying any cryptocurrency, you should take time to analyze the project or blockchain behind the crypto, the founders, the security of the project, its reputation, and much more for your due diligence.
Crypto pre sales are a common investment strategy, but they take some work to effectively analyze even if you think you have identified the next on-trend project or NFT success story.
A coin or project website and white paper should make it clear if a coin is in pre-sale, and there should be a clear and confident road map; these items should form the start of your pre-sale coin research.
Availability
Before you buy crypto, you’ll want to ensure you have a safe medium for doing so. Cryptocurrencies already fully launched to the markets will be listed on popular centralized and decentralized exchanges. If a coin is in its pre-sale stages, then it’s likely available to buy on the project’s website, and this is where you should be extra careful to consider if the project is genuine and if the purchase method is secure.
Market Capitalization
The market capitalization of a cryptocurrency is the total value owned or invested in that coin. It’s calculated by multiplying the total number of coins in circulation by the current market price. Market capitalization is a metric of market value and popularity; if it’s falling, investors are getting out of the coin; if it’s rising, investors are buying. New projects can quickly be identified by their low market capitalization values. CoinMarketCap is the oldest and most-used site for quick metrics on market capitalization as well as coin prices, price history, and other useful data.
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