Things To Consider Before Choosing A Cryptocurrency To Invest In

By Jane1289 | Crypthusiast | 1 Nov 2020

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As a beginner in crypto space, we are often skeptical of what cryptocurrency to invest in. When it comes to choosing the right cryptocurrency, the decision can be somewhat confusing because there are thousands of cryptocurrencies available on the crypto market. It is always time-consuming doing research and sorting the worthy cryptocurrencies from not so good ones. 

Many cryptocurrencies offer striking investment opportunities. However, the choices always depend on what you are looking for associated with your investment goals. And the first thing to consider is the level of experience you have. Some cryptocurrencies might be suitable for beginners, and some are good for experienced and professional crypto traders.

"You should always remember that choosing the best cryptocurrency isn't the best thing to consider to become a successful crypto trader."

You should need a good strategy, substantial crypto knowledge, and considerations before you start looking and sorting the best crypto to invest in.

Here are things to consider before choosing a cryptocurrency to invest in.

1. Do Independent Research

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If you are new to crypto investing, it is always important to do your personal research. You should gain as much knowledge as possible about the company offering the cryptocurrency including its history.

  • A cryptocurrency with a strong community shows that people have a strong belief in that certain cryptocurrency. There are many social media platforms and crypto websites where you can research cryptocurrencies, from history to its latest updates.

  • The very important thing to search about is the 'White Paper'. The whitepaper is the best thing to evaluate the fundamentals of a certain cryptocurrency. It will also tell you the cryptocurrency's credibility and professionalism. The more white paper you read, the better you will identify which crypto is the best to invest in. Do not invest unless you have read the white paper.

  • Also, consider researching the track record of the company's leadership if it has a strong team. A strong team carried out the vision of the company and lead the cryptocurrency to success. On the contrary, a weak team will steer the company to failure.

  • Search for a company with innovative technology and strong proof of concept.
    For example Ethereum. Currently, one of the best cryptocurrencies with innovative technology.
    ∆ They are the very first crypto to design smart contracts, it is a form of technology that facilitates the exchange of anything of value.
    ∆ Another one is their Ethereum Virtual Machine technology or EVM. This enables the developers to create applications on a bigger scale easily. Ethereum technology is designed for developers to easily integrate the blockchain with their application.

  • Pay attention to the historical charts on your idle cryptocurrency, as well as its market cap and its circulation. Do not just focus on the market price alone. Look for its stability and check if it is continually been growing.

It is also important to consider the opinions of different crypto users, especially the more advanced and experienced crypto traders because they are much knowledgeable about things to consider in crypto investing.

2. Considering Your Risk Level

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For beginners in crypto investing, it is always important to diversify your investments. Always consider choosing one of the more established digital currencies to secure your investment portfolio.

The risk of crypto investing is mainly related to its volatility. Volatility is high-risk and speculative. It is important to understand the risk before you start investing or trading in cryptocurrency.

Nowadays, there are thousands of cryptocurrencies in the crypto market. By far, the most stable one is of course the king of the cryptos, the Bitcoin. Being the oldest crypto on the market, investing in it is a somewhat safe bet. Some crypto like Ethereum, Bitcoin, Ripple, and Bitcoin Cash, is also good choices to invest in.

Another safe investment is the 'stablecoins.' Stablecoins are designed to mirror a fiat currency, that keeps the price instabilities to a minimum. These coins are a great way to hold money between trades or use money into a crypto exchange.

3. Stay Updated On Upcoming ICO

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The 'Initial Coin Offering’ in the cryptocurrency is equivalent to an 'Initial Public Offering (IPO).' The ICO become the de-facto method of rolling out a new cryptocurrency and for the company to raise working capital. It is a great opportunity to get in on the ground floor.

Interested investors can buy into the offering and receive the new cryptocurrency token issued by the company. During the ICO, you will learn about what has made successful offerings in the past to help you spot the next promising one. You will also see some of the biggest gains by investing in the right ICO.

Early investors in an ICO operation are usually inspired to buy tokens as they hope that plan will be successful after it launches. If it takes place, the value of the tokens they bought during the ICO will rise above the price set during the ICO itself, and they will earn overall gains. This is the primary benefit of an ICO: the potential for very high returns.

Many investors became millionaires because of ICOs.

For example, in 2017, there were 435 successful ICOs, each raising an average of $12.7 million. So, the total amount raised for 2017 was $5.6 billion, with the 10 largest projects raising 25% of this total. Furthermore, tokens purchased in ICOs returned an average of 12.8 times on the initial investment in dollar terms. [¹]

4. Know The Exchanges

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In case you have missed the ICO, you still have the opportunity to buy the coins on exchanges. You can find better investments in the more obscure exchanges.

Of course, as always part of knowing a certain thing, you should always research the exchanges. Look who is behind it to help you ensure your investments.

5. Take Note of the Important Dates for Trading

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Crypto companies often announce partnerships, project milestones, and other critical dates on their official websites, Twitter feed, or even blogs. By closely monitoring these feeds, you will be able to learn of these important dates before many people ever hear them. Therefore, you can set the time for your trades based on these important dates.

Usually, there are prices jump around these important milestones, so you can anticipate if you have advance notice. Be ready to buy coins as soon as you learn of such important news.

You need a higher level of engagement for this method. But choosing a currency based on these important dates can boost your short-term gains.

6. Closely Monitor Your Portfolio

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Once you have made a choice and invest in cryptocurrency, make sure to closely monitor your assets. Stay updated on all the news about the certain cryptocurrencies you have invested in.

Continue to do research and acquire knowledge about cryptocurrency. Stay connected with all research you did, so you can be prepared to sell when necessary. You will also know the best time to boost your investment.

Nowadays, many investors are into crypto investment as an alternative due to this pandemic. Some investors still don't see the brighter future in cryptocurrency, some people are still undecided on which cryptocurrency will be worth their investment. By acquiring enough knowledge about cryptocurrencies and setting a good strategy, you will be able to understand the flow in the crypto space, and you will learn which crypto is the best to invest in. And through these strategies, you will learn how to protect your investment and will help you grow your portfolio.

Written by: @Jane

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