How to Find Your Next Cryptocurrency Investment
Bitcoin has really exploded and turned out to be a tremendously profitable investment for so many people that it has started a trend of looking for the next best thing. Both people who missed out on the big money from bitcoin investment and people who made millions are looking to find the next cryptocurrency boom.
Sometimes it is as easy as finding the next ICO, initial coin offering, but beware because for every success story like bitcoin, there are many failures. Not every ICO turns into profit and knowing which alternate coins, or altcoins to invest in is a bit tricky.
There are hundreds and hundreds of different types of cryptocurrency and just as many sources of information about them. Some of the places to find information are accurate and some are not, most are really based on opinion, such as reddit, slack, forums and the cryptocurrency websites themselves. Many cryptocurrencies are short lived and not very popular. It might seem impossible to navigate and predict which currencies are good investments and which aren’t but we will try to help you learn how to rank them and predict where you are best off investing your funds.
Here are some hints of what to watch for even before you use actual numbers to make comparisons.
- Distribution: What are the rules for distribution? How many coins will be sold? What will happen to unused coins? Who will be able to purchase them?
- Exchange: Is the currency going to be listed on an exchange? This is an excellent predictor of success. If an established exchange has committed to list a particular coin it is likely to be a profitable investment in the ICO phase.
- White Paper: Check the White Paper and look at how thorough, well supported and technologically sound the project is. It is a good indicator of the potential for the currency.
- Community: The sources that were mentioned above with public opinion are an important way to predict the profitability of new cryptocurrencies. If the people who are talking about cryptocurrency aren’t talking about this one, then it isn’t likely to take off. Hype is a great way to figure out that a coin will be profitable because its those who will buy it who are talking about it.
Once a currency has been traded, and the ICO is over, you can start to compare it to other cryptocurrencies. There are certain factors that are used for basic comparison and they will help predict if a coin is going to be a good investment or not.
You can track these currencies on a daily basis. The most commonly used platform for this is called CoinMarketCap. It features more than 800 types of cryptocurrency. Through this platform you can watch the following indicators and then make your decisions.
- 24h Volume: how much value has been traded in the last 24 hours
- Coin Liquidity: volume percentage and BTC volume
- Market Capitalization:, number of coins multiplied by the current price
Another piece of information that is good to watch is developer activity: who is releasing this coin and what is their history.
Of course, none of this guarantees that your investment will be profitable, but if you follow these indicators you have a much better chance than if you make blind purchases.