Selecting the best performing cryptocurrencies at any time can be a challenge, but when the markets are struggling or crashing, you may think that it is even harder to make the choice.
Times like this can be a real opportunity though if we allow them to be. They can force us to look more closely at the structure of a project and make an informed decision about whether they will come out of the crisis unscathed and in a good position to grow through the second half of 2020.
In this article, we will give some handy tips on what to look for when considering buying cryptocurrency investments:
1. Stay Focus on Facts
There is a lot of negative talk in the media and financial industry about cryptocurrency, which suggests it is just a fad at best, or a pyramid scheme at worst. However, there is an increasing band of people that are embracing the financial possibilities and practical benefits of cryptocurrency assets. Unfortunately, both sides of the coin have loud voices and it can be hard to see past the noise.
For successful investing in this arena, try to ignore the noise from both sides and stay focused on buying and holding the assets that you have faith in.
2. Fundamentals and Active Development
A lot of cryptocurrency assets don’t have a fundamental use case and yet still thrive and rocket in price. Other investments may have the partnerships and yet not gain in value.
Over the longer-term, we tend to see the better investments rise to the top, so it is important to do your research to make sure the projects you invest in have authentically good fundamentals.
When researching, you can refer to whitepapers, check the projects updates on social media and read reviews on the internet to determine how the project is being perceived. From this, you will get a good grounding on the project’s overall impact but also whether there are any issues with scams or false advertising.
To get a quick view of the cryptocurrencies that you are considering, you can use a roadmap as a cheat sheet.
“A roadmap is a document that sets out what the project is hoping to achieve over the short term and long term,” explains Aaron Hook, a crypto blogger at OXEssays and UKWritings. “As the project develops, it should be regularly updated to show their achievements and any delays that they have faced.”
There are some key milestones to look out for, like hard forks, mainnets and client onboarding target dates, as these will often cause a positive price action before the event.
Once you’ve identified a potential investment, have a look at any upcoming milestones in 2020, as these could indicate a big price rise when the market recovers.
4. Pre-Crash Performance
Although short term action on price is not necessarily an indication of future performance, the coins that were performing well before the market turned down are worth watching. There is a good chance that they will continue to thrive after the market recovers.
“When deciding between investments, have a look at the price action before the crash to get insights into those investments that might come back faster,” suggests Dee Carter, a tech writer at Academized and BigAssignments. “Similarly, those investments that weren’t moving when the rest of the market was rising should be avoided.”
5. Look at Big Caps
Having a good selection of undiscovered treasures is fantastic, but don’t overlook the big caps. Funds like Bitcoin, Ethereum and Litecoin are able to move markets, or at least sections of the market, alone, so it is a sensible idea to hold some of the big caps as well as your own smaller investment choices.
Bitcoin’s stock is strong at the moment with the “infinite cash” promised by the Federal Reserve as a result of the coronavirus outbreak, and Ethereum’s DeFi has grown dramatically in the last nine months.
6. Due Diligence
In the digital age that we live, there is really no excuse not to have fully researched cryptocurrency investments before you buy. Every asset has whitepapers easily available online to read. If you are unable to tell how the coin works and makes money, then it would be sensible to invest elsewhere.
Beatrix Potter is a news writer specializing in cryptocurrency markets at Do My Assignment and Urgent Assignments. Her specialism is blockchain and she also proofreads articles on this topic at OXEssays.