August 19, 2021, | AtoZ Markets-With so many cryptocurrencies on the market today, it would be a shame if you only stuck with one or two. The world of crypto or digital coins is so vast with so many options to choose from, and you’d be severely limiting your earning potential by doing so. We do understand, however, that choosing a cryptocurrency can be difficult with all the technological jargon. But there are some things that even the layperson can do to tell if a coin could be a sound investment. Here are a few things you should look for when picking a cryptocurrency to invest in.
General Consensus of Digital Coin Markets
In digital coin markets, one of the first things that you should do is check how much excitement there is about a coin in the community. Check what people are saying about the project, the people behind it, and the opinion the public has of their developers. We also suggest you check out sites like CoinList and look at what analysts have to say. This will give you an initial idea of whether a coin should be considered or not worth your time.
The Market Cap
You need to be careful when investing in low-cap coins even though they’re showing great growth. When we mean low-cap, we’re talking about any coin that is outside the top 50.
One of the issues with these coins is that they tend to be very volatile, even by crypto standards. Not only that, but you may never know if they’ll be out of circulation, and they might not be available on most exchanges. This eventually means that you could have a much harder time unloading them if they take a plunge.
Instead, you should pay attention to mid-cap coins. These will often still have some potential and are less likely to be overpriced. They’re not blue chips, however, and some of them have gone off the map before, so you still need to look at the research.
What Problem is it Trying to Solve?
The use case is another thing that should get your attention when picking crypto. Some coins are virtually useless and are only there for speculation. Dogecoin is a great example. While they might have an impressive market cap and decent volume, you never know where demand will go, as many found out the hard way after the price tumbled when Elon Musk called it a “hustle” on SNL.
Instead, you should go with coins with a proven business case. You will need to learn how to read whitepapers and look at the development team’s vision. Only stick to realistic projects with respected people behind them. It’s also great if they’ve worked on well-known projects before.
Cryptocurrency Price History
Just like any investment, you should also look at the historical data on the coming before jumping in. This will prevent you from buying a cryptocurrency when it’s overpriced or when it’s falling. Looking at historical charts can give you a general idea of whether the price is stabilizing and still has room to grow.
These are all factors that you need to look at closely whenever picking a cryptocurrency. This will help you identify real projects from fake ones and find coins that have a real chance of making a difference.