With cryptocurrencies such as bitcoin constantly being seen in the headlines, you’ve probably at least wondered if investing in crypto would be a wise move for you.
In a way, trading cryptocurrency is much like trading penny stocks. The patterns to look for in the charts remain largely the same, and the old adage of buying low and selling high still remains true.
That being said, if you plan on buying and holding cryptocurrency for the long term, you need to be very careful about the ones you choose to invest. Go back as little as a couple years ago, and you will see that the majority of coins in in the Top 20 then are no longer there.
So how do you know if a coin will be a wise investment or not? Let’s find out.
Here are the top three qualities to look for in a cryptocurrency to invest in:
Is The Technology Promising?
Or to be more specific, what problem(s) does the technology behind the coin promise to solve? The vast majority of coins in the crypto market lack a technology meant to solve a problem, and those are the coins that see low trading volume and that get left behind.
But in contrast to this, coins that strive to solve a problem are the ones that get the most media attention and buying volume. Examples of problems that coins may strive to solve include high fees, slow transaction times, or lack of anonymity.
Who Is The Team Behind The Coin?
Never invest in any coin in the crypto market for the long term without first researching the development team behind it. Are they active and do they post regular updates on social media or not? Are they professional? What’s their website like? What’s their educational background?
Ideally the coin you invest in should have an A-grade team behind it. This means the members of the team should be college graduates, be experienced in their field, be active behind their coin’s development, post regular updates on social media, be very professional in terms of how they compose themselves online, and have a complete and well written white paper explaining the purpose behind their technology.
What Is The Price History Of The Coin?
Finally, head over to the charts and analyze the price history of the coin. Specifically, analyze its performance in comparison to more established cryptocurrencies such as Bitcoin or Ethereum.
Does the performance of the coin you are considering investing in follow the same trend as Bitcoin or Ethereum? Does it outperform or underperform in its percent gains in comparison to them? Is the general price movement trending up or is it fluctuating dramatically up and down and seemingly unpredictably?
An ideal coin to invest in will have price movements similar to bitcoin or ethereum though with larger percent gains, and with a general trend that’s leading upward.
Choosing A Cryptocurrency To Invest In
All in all, these are the top three qualities that you will want to carefully research and look for before you choose a coin to invest in.