HOW TO KNOW WHICH CRYPTOCURRENCY TO INVEST IN

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18 Jan 2024

WHAT TO REALLY KNOW

Hi Bulbers,
It is a known fact that the crypto world is growing rapidly as more cryptocurrencies are been created every day. According to Forbes, as of June 2023, there are almost 26,000 cryptocurrencies publicly traded, but this number is growing rapidly as new ones are created daily. Cryptocurrencies come in various types, such as coins, tokens, NFTs and stablecoins, each serving different purposes and functionalities in the digital asset ecosystem. With these rising number it would be wise to know which of these cryptocurrencies would make waves in the market and make profit in the long run.

CoinMarketCap reports that there are approximately 25,994 cryptocurrencies, with a total market capitalisation of $US1.18 trillion. That’s quite a crowd considering that Bitcoin only launched in 2009.The first alternatives to the original crypto later termed altcoinsdidn’t appear on the scene until 2011, with the likes of Litecoin (LTC) and Namecoin (NMC). It wasn’t until Ethereum (ETH) launched in 2015 that altcoins gained popularity. In the early run, it is said that only few of these cryptocurrencies existed on the market till 2015 with coming of Ethereum and others followed in.

With the rising rate it is estimated to continue rising by an additional 10% in the year 2024 as more cryptocurrencies are expected to be listed. These cryptocurrencies are as followed Pi network, ice, bulb, avive and so many more. With this inflow we most understand the need to know which one will maximise profit in the future.

WHY YOU NEED TO ASSESS A CRYPTOCURRENCY BEFORE PURCHASING.

Get educated.
Prepare for volatility.
Manage risks.
Get smart about security.

1. Get educated: When you hear about people buying crypto, it might sound like a singular asset like a stock or a bond. It's not. "Crypto" encompasses a wide range of investments with varying purposes, including bitcoin, ethereum, and more than 19,000 other cryptocurrencies—many untested and unlikely to survive. Before you jump in, get educated on the ins and outs of this fast-growing industry. For example, you should be able to explain the value of blockchain technology and decentralization to friends and family. If you're interested in bitcoin, you should know why concepts like cryptographic hashes and mining are important to its function. In addition to the fundamentals, stay up to date on the latest crypto news. It's a fast-paced market, and new developments happen almost daily. Government regulations are also evolving, and each new decision can impact how crypto is treated legally. Once you've learned how the technology and economics work, be honest with yourself: Do you truly believe crypto will have value in the long run? If your answer is "no" or "I'm unsure," it may not be the right for you. This is an important question because choppy markets may test your conviction.
2. Prepare for volatility: There are no two ways about it, .Crypto is highly volatile, and may be more susceptible to market manipulation than securities. Crypto holders do not benefit from the same regulatory protections applicable to registered securities, and the future regulatory environment for crypto is currently uncertain. Furthermore, it’s also not insured by the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC), meaning you should only buy crypto with an amount you're willing to lose. You’ll want to ask yourself if you’re comfortable with these risks before entering the market. To better understand the volatility, let’s look at some numbers. Consider bitcoin, the oldest and largest cryptocurrency by market cap. Bitcoin's price regularly experiences both double-digit drops and double-digit rallies, sometimes within the same week. If you bought a single bitcoin at $7,000 at the start of the coronavirus pandemic in March 2020, it would have risen to $69,000 in November 2021—a gain of over 850%. But by June 2022, it would have plummeted to $17,500—a price cut of over 70% from its November highs. Ethereum has seen its share of volatility as well. In March 2020, it hovered around $120. It then skyrocketed over 3,900% to $4,867 by November 2021. By June 2022, it had dipped back down to $880. Beyond these two crypto giants, the volatility can get even more hair-raising. Take the Terra network's token LUNA. Once a widely held cryptocurrency, LUNA saw its price tumble from a high of nearly $120 to functionally zero in May 2022 after its financial underpinnings collapsed. Dogecoin's price history consists of some even more stunning swings, including a gain of over 42,000% from March 2020 to November 2021. By June 2022, it had fallen over 90% from its all-time high.
3. Manage risks: Given the uncertainty of trading crypto, it's best to think defensively. While there can be a lot of upside, remember that the downsides can be sudden and sharp. Also note that crypto may have a higher chance of going to zero than many other assets. In light of this, limit your allocation to an amount you can afford to lose. If you're looking to diversify your portfolio or are saving for a particular goal (particularly a short-term goal), crypto may not be an appropriate vehicle due to its unpredictability. If you make gains that make crypto a larger part of your portfolio than intended, consider reallocating at least some of those gains to more stable asset classes. This may help iron out some of the unpredictability from your overall holdings.
4. Get smart about security: One of the most important aspects of buying crypto is storing it safely. Those who aren't interested in learning the ins and outs of crypto cybersecurity may find it easiest to keep their coins with a trusted custody provider with strong and audited security protocols. These platforms generally have security processes that may be better suited for beginners. On the other hand, those looking for a more hands-on approach may choose to custody and secure the asset themselves. This typically involves buying crypto on a crypto trading platform, then transferring holdings to a private digital wallet or physical cold wallet (a USB-like device for crypto storage). Note that while this route gives you more flexibility with how you use your crypto, there's also no customer service team for those who manage their own security. If your private or exchange accounts are hacked or phished, the crypto trading platform you use goes bankrupt, or you transfer your coins to the wrong wallet address, you may lose access to them forever.

PLACES TO LOOK WHEN INVESTING IN ANY CRYPTOCURRENCY.

According to investopedia, there are some platform, tools and channels that helps investors of crypto to ascertain and find cryptocurrencies that will bring profit in the long run. It has listed some as follows:

social media
Websites
tools
Defi Platforms
Exchange-Traded Funds (ETFs)

1. Social Media:
Social media is known for its ability to transmit information fast. X (formerly Twitter), for example, is one of the quickest-moving and -responding platforms in the United States. You can easily find cryptocurrency developers and founders on X, tweeting about their cryptocurrency whenever there are changes or new coins. Notifications for specific keywords on X are especially helpful. If you set up alerts for phrases like new crypto, crypto release, or crypto, you will receive notifications about any cryptocurrency-related tweet. Telegram is another instant messaging platform that can deliver timely new crypto developments. As we all know telegram houses a lot of platforms and groups relating to crypto and other investments. With the help of numerous post, links as well as comments one can deduce if a particular cryptocurrency would make waves in the market.

2. Websites:
There are many websites that you can look over to find new cryptocurrencies. Some of the more reputable ones are Top ICO List and Smith & Crown. These website can give insight on the cryptocurrencies currently in market and allow you choose according your requirements.

3. Tools:
You can use several tools to help you verify the validity of a cryptocurrency. PooCoin Charts lets you enter the token name or its address and displays information about transactions, contracts, holders, prices, and more, enabling you to see whether anyone else is active. Token Sniffer lets you enter the cryptocurrency’s name or address and displays an audit of it. For instance, a scan of Ax-1 Orbit (address 0x0c...b805) displayed the following information on Aug. 13, 2022:

Warning: The coin was flagged for being part of a scam, bug, or hack.
Swap Analysis: The token is sellable and has a buy-and-sell fee of less than 10%.
Contract Analysis: Verified contract, no prior similar contracts, the source is not an owner, no special creator permissions.
Holder Analysis: Creator holds less than 5% of the supply, other holders have less than 5% of the supply.
Liquidity Analysis: Not enough liquidity, 95% of liquidity is burned/locked, creator holds less than 5% of liquidity.
Token Similarities: Token Sniffer lets you view the contract code and generate a bubble map that shows you the creator’s address, the addresses of the top 100 holders, and the percentage that they hold. You’ll also see any burn addresses, which is where developers send coins to take them permanently out of circulation. For example;

4. DeFi Platforms:
Decentralized finance (DeFi) platforms function like traditional finance marketplaces, except that they use smart contracts to execute transactions. Many DeFi platforms have native tokens used within their networks to facilitate transactions. Examples of DeFi platforms are Pancake Swap, Uniswap, and Aave. Non-Fungible Token (NFT) Marketplaces NFTs are one-of-a-kind digital assets that have been tokenized. This is the process of linking an encoded alphanumeric sequence to the asset and storing that information on a blockchain. It establishes ownership without question because the token’s network validators must verify ownership through a consensus. NFTs are also critical components of the metaverse, an emerging tech trend championed by enterprises that operate in the digital landscape. OpenSea and Rarible are two examples of popular NFT marketplaces. Here, you can find them ranging in price from hundreds to tens of thousands of dollars.
5. Exchange-Traded Funds (ETFs):
You can also invest indirectly in cryptocurrencies through derivatives that trade on mainstream exchanges. The Chicago Mercantile Exchange (CME) crypto futures, including Bitcoin and ether futures, are popular with investors looking for indirect exposure to crypto. Bitcoin-linked exchange-traded funds (ETFs), based on CME’s Bitcoin futures, debuted in crypto markets in 2021, and more continue to emerge as brokerages work to persuade the SEC to approve crypto-linked ETFs.

Six cryptocurrency tips by money mentor

1. Have a strategy for crypto trading
It isn’t easy to separate genuine cryptocurrency recommendations from the scams; there are lots of sharks out there waiting to take your money.
Reports of crypto investment scams surged to 7,118 in the first nine months of 2021. This was up 30% on the whole of 2020, according to Action Fraud, with the average loss per victim at £20,500.

So when you’re confronted with a lot of information about a cryptocurrency, take a step back from the hype.
Try to look critically at the project or platform. How many users does it have? What problem does it solve? Avoid coins that promise the Earth but haven’t delivered anything tangible.

2. Manage risk
Some people offering crypto trading tips might not have your best interests at heart. So don’t get stung making the same mistakes as others. Set limits on how much you invest in a particular digital currency and don’t be tempted to trade with more money than you can afford to lose.
Cryptocurrency trading is a high-risk business and more traders lose money than don’t.

3. Diversify your crypto portfolio
It doesn’t pay to have too much invested in one single cryptocurrency. Or as they say: don’t put all your eggs in one basket.
As with stocks and shares, spread your money out among different digital currencies.

This means you don’t risk being over-exposed should one of them plummet in value – especially as the market prices of these investments are highly volatile.
There are thousands to choose from, so do your research. Examples include worldcoin and safemoon.

4. Be in it for the long term
Prices can rise and fall quite dramatically day to day, and novice traders are often duped into panic selling when prices are low.
Cryptocurrencies are not going to go away. Leaving your money in the crypto market for months or years at a time could offer you the best rewards.

5. Automate purchases
Just as with regular stocks and shares, it can help to automate your crypto purchases to take advantage of pound-cost averaging.
Most cryptocurrency exchanges, including Coinbase and Gemini, allow you to set up recurring buys.

This is where crypto investors tell the platform to purchase a fixed amount of their preferred cryptocurrency every month – for example, £100 worth of bitcoin. It means they get a bit less of the currency when prices are high, and a little more when prices are low.

That takes the stress out of trying to time the market by either buying a currency at what you think is the lowest possible price or selling at the highest price. It’s something that even market professionals struggle to get right.
6. Use trading bots
Trading bots can be useful in some circumstances, but they aren’t recommended for beginners looking for crypto investment tips. Often, they are just scams in disguise.

If real algorithm existed that timed your buy and sell trades to perfection, everyone would be using them.

Five common crypto mistakes

The latest research from UK regulator the Financial Conduct Authority showed that about 2.3m Brits own cryptocurrency in one form or another

1. Buying just because the price is low
Low prices do not always represent bargains. Sometimes prices are low for a reason! Watch out for cryptocurrencies with falling user rates.

Often, too, developers leave a project and it stops getting properly updated, making the cryptocurrency insecure.

2. Going ‘all-in’
Some of the more suspect trading platforms suggest you should maximise your money by betting as much as possible. This is a quick way to the poor house.

Better crypto investment tips would be to only use a certain proportion of your investing capital — say 5% — and always keep an emergency cash fund in an easy access savings account that never gets invested in the market.

3. Thinking crypto is ‘easy money’
There’s nothing easy about making money through trading any kind of financial asset, whether stocks and shares or commodities like silver and gold. The same can be said for cryptocurrency.

Anyone who says different is probably trying to trick you into making crypto mistakes.

4. Forgetting your crypto keyphrase
If you have a hardware wallet for storing your crypto offline, forgetting your keyphrase is like losing the keys to a bank vault.
Without your keyphrase, all your cryptos will be irretrievable.

5. Falling for scams
Be very wary of crypto deals that sound too good to be true.

four common crypto scams

● Cloud multiplier scams:

Fraudsters sometimes contact victims by email or text with an “investment opportunity”. They promise to give investors double or triple the amount they have put into bitcoin if they send their cryptocurrency to a particular digital wallet.
REMEMBER: Offers of free money should always be viewed with great scepticism

● Pump and dump:

Criminals can easily inflate or deflate the price of very small or unknown cryptocurrencies, sometimes sending the value of these currencies skyrocketing.
Sometimes criminals will own a lot of a particular cryptocurrency (through pre-mining much of it before it is available to the general public).

When unwitting traders rush in to try and grab a piece of the action, the criminals wait for the price to increase before selling all their coins and causing the price to crash.
They can pump up the price by promoting it on social media, before selling it at the higher price.

● Malicious wallet software:

The best crypto tips will tell you to stick with big name crypto wallets, such as Ledger, Trezor, Exodus or MetaMask.

Dodgy or unknown wallets that you find on Google Play or the App Store can steal your crypto funds with dodgy code.

● Fake coins

With so many cryptocurrencies on the market, it can be difficult to tell what’s real and what’s not.
When you invest in fake coins, criminals can steal your identity and often your hard-earned money.

Don’t take anyone else’s word for it and use as many sources as possible to do your own research on coins before you buy them.

Know your crypto lingo

There is a lot of jargon out there in crypto land and often it can be difficult to decipher.

Use this helpful list to make the most of the best crypto tips and dodge common cryptocurrency mistakes that could blow up your trading account.

Altcoin: a portmanteau of “alternative” and “coin”, altcoin refers to any cryptocurrency other than the original one, bitcoin.
Cryptocurrency exchanges: just like regular stock exchanges, the likes of Coinbase, Binance, Gemini and Bitstamp allow traders and investors to buy and sell — except that here they are trading cryptocurrencies. Unlike standard stock markets, cryptocurrency exchanges are online-only and are open 24 hours a day, seven days a week.
Limits: most exchanges do not set limits or restrictions on the number of cryptocurrency trades their users can make in a day. On turbulent trading days, when cryptocurrency prices are moving up or down very quickly, some brokers may put a short-term halt on people depositing funds on their platforms.
Market cap: the total value of a cryptocurrency. It’s calculated by multiplying the price of a cryptocurrency by the total number of its coins in circulation. It’s a useful measure for comparing the total value or size of different cryptocurrencies.
Shorting: “shorting” cryptocurrency means betting on the price going down rather than up.
Forks: a cryptocurrency fork is a split in a blockchain where two separate blockchains are created. This is sometimes because of a disagreement between developers as to how the blockchain should be organised. In 2017, bitcoin forked into two separate blockchains: bitcoin and bitcoin cash.
ICO: this is an initial coin offering where new cryptos are sold to investors for the first time. It’s similar to an initial public offering (IPO) in the stocks and shares world.
Margin trading: when platforms talk about margin trading, they mean investors borrow money to increase their bet on a cryptocurrency. Be very careful, though, because margin trading can dramatically exacerbate losses if a trade doesn’t go your way.
Fiat: a fiat currency is one that is backed by a sovereign government. For instance, sterling, US dollars or Indian rupees.
Cloud mining: people can “mine”, or create, cryptocurrencies to compete for rewards in the form of newly minted crypto. Cloud mining uses remote data centres with shared processing power, like the kind that powers Google software, to pool resources and cut the cost of mining.

Be extremely wary, as many cloud mining companies are just scams. An incredible amount of computing power is needed to mine the top cryptocurrencies. Anyone offering easy cloud-mining rewards is likely to be a charlatan.
Bull markets and bear markets: these are phrases borrowed from traditional stock markets. A bull market means traders are confident in the prospects for a particular investment, meaning they will keep buying and prices will keep rising – whereas in a bear market, traders are nervous and prices will generally fall.
Sell orders: a sell order is an instruction given by traders to a platform to sell cryptocurrency that they own when the price hits a certain level. In traditional markets, this is referred to as a “stop loss”.

Cridits;