Heard stories of crypto investors making good returns on small investments? Well, so has everyone else! In practice, it’s not always that straightforward. Making a reasonable return on your crypto investment means taking calculated risks. The key word here is “calculated.”
It is possible to mitigate risks by making educated choices. As the market has become more crowded with new options, it has become more difficult to decide which currency to invest in.
To make the right choice, let's figure it out!
How to Choose a Cryptocurrency
There is no cut-and-dry answer, but we can analyze information and give you an overview that will help you make the best choices.
What to Consider When Choosing a Currency
Community and Professional Infrastructure
A currency is only as strong as its community. These networks become more stable as more nodes are added.
Also, off-network communities are great places to get advice on where and how to trade. The large community is a great indicator of a safe cryptocurrency.
Pricing history in this context means how the value of the coin has fluctuated in the past. Fluctuation is a natural part of cryptocurrencies. However, a huge fluctuation or a lack of resilience may be strong indicators of a poor investment.
The underlying technology makes a massive difference. It is very difficult to determine the most technologically advanced cryptocurrency today because they are created fast, and each crypto declares its own technological progress in the development of the blockchain. But those tokens still haven't proved their advantages in comparison with the old verified ones.
For example, Ethereum is the benchmark currency when it comes to tech. There is great potential there for smart contracts and integrating blockchain in custom apps.
Future Development Potential
Things such as a team driving the currency forward and its vision are important for crypto's continued success. But also there are vital factors that make its future development possible.
- A cryptocurrency gives you anonymity.
- It isn't regulated by the government.
- It’s widely accepted as a payment method.
- It allows you to do international transactions with low fees.
It follows that such crypto has the potential for further development.
Develop a Personal Strategy
There is no such thing as a universal strategy. Like with any form of trading, it is up to you to decide where you will get the best return. That's why it is so important to develop a personal strategy.
The first thing to consider when developing your trading strategy is a reliable exchange where you will be able to trade. By having done this, you will significantly reduce the risk of capital loss.
Then you should choose a cryptocurrency with a high market cap. This will provide you with a higher probability of future income. There are more than a thousand tokens, and it's better to trade with secure pairs (e.g., ETH/LTC).
Be careful when reading news about crypto, because the hype influences the cryptocurrency market. A lot of traders start buying currency due to its popularity. You can resort to buying a cryptocurrency at a high price, and by the time dust settles, the price will drop sharply. Therefore, be wiser and do not invest in cryptocurrency just because everyone is talking about it. It’s better to do your own research.
Look at historical price charts and stability to get a sense of the risk and potential gain.
Choose the Level of Risk
As already mentioned, cryptocurrency is volatile. Most short-term investors who buy a token expect a big jump in its value and forget that the price may not grow but rather fall. To avoid a sharp fall and loss of investments, you need to develop a strategy in which income can be taken at regular intervals.
As you develop, you will start to uncover at what point crypto may fall or rise. Deciding how big a risk you want to take is an important step!
What Are Your Options?
There are many cryptocurrencies in which you can invest in 2021. But here below we have collected the five most promising, from our point of view, and explained why we think so.
The mother of all coins! Of course, this is amazing information that Bitcoin will still be profitable to trade even in 2021. Despite the fact that more than ten years have passed since its foundation, it still remains in the first position. Despite these are the most famous, it doesn't mean your options are limited to these. Well-known exchange platforms have their cryptocurrencies, such as Binance and even Crypto.com. Follow the link to learn more about them and the benefits of buying and holding them.
Reasons to Invest
- There are reliable forecasts of extremely strong growth.
- The demand for liquid assets has increased during the pandemic.
- It’s the most respected, widespread crypto available.
Then comes Litecoin, a very impressive cryptocurrency that can hold up to 84 million coins, which is more than Bitcoin.
Reasons to Invest
- The short-term forecasts are pessimistic, but there is potential for great long-term growth.
- Decentralised financial markets tend to expand.
- Costs are low when compared to Bitcoin.
This technology is different from the previous two. It operates on decentralized blockchain technology, which is completely autonomous and excludes human or company intervention.
Reasons to Invest
- It holds strong historical performance.
- Investing supports decentralized transaction methods.
- The second version of Ethereum is about to be announced, which is likely to have a positive impact.
The Basic Attention Token is an Ethereum-based token that can be used to access various advertising services on the Brave blockchain system. Users who publish content using the Brave browser receive a corresponding reward in BAT coins.
Reasons to Invest
- The Basic Attention Token supports an anonymized browser project made to disrupt the digital advertising industry.
- The popularity of the token gives it good long-term performance ability.
- The current low price suggests an excellent potential for growth.
Cardano is a relatively recently founded cryptocurrency that has risen up to 1500% from its initial value. It occupies high places in terms of capitalization, standing in line with such giants as Bitcoin, Ethereum, and Litecoin.
Reasons to Invest
- As a third-generation cryptocurrency, it has benefited from a wealth of experience. This makes it stable and secure.
- It’s based on the Ethereum infrastructure, which is highly effective.
- It offers lots of features, including a refund capacity.
In conclusion, we can say that all these five cryptocurrencies are worthy of traders' attention and are in great demand.
Choose Intelligently and Trade Securely
Some of your choices will come down to personal preference. You should definitely read up more thoroughly on each, watch some explainer videos, and trust your instincts. Security should be a major concern. After that, it is up to you to make an educated assessment of what currency you think will perform best.
Once you have made your choice on currency, make sure you go with a reliable exchange platform like Godex.