How To Choose Top Performing Cryptocurrency?
There are so many options for cryptocurrencies because this whole industry isn’t just Bitcoin or few other famous cryptos you may have already heard of. Having so many options to choose from is exciting! But just like dating in the digital age, having too many options can be tricky. You’re always keeping an eye open for the next best thing.
Investing through one or two methods for analyzing is incredibly dangerous. Many newbie investors only rely on things like technical analysis and favorite economic news anchors on TV.
- The Analyzing the markets from five different points,
1. Fundamental analysis
2. Sentimental (market sentiment) analysis
3. Technical analysis
4. Capital analysis (personal risk management)
5. Overall analysis
As a fundamental analyst, you look at data from facts to rumors to decide whether that coin is worth buying.
Market sentiment gauges the emotions and attitudes of traders in the market about a specific security. Using sentimental analysis, even non-animal-lovers in the investing world compare market expectations to bulls and bears.
As a technical analyst, you look at how a cryptocurrency’s price has been performing, and then you make an investment decision that is right for you. More specifically, you analyze the price action of your favorite cryptocurrency to see the best time to jump into a relationship and a good time to call it quits. You can see the history of the crypto price actions on something called charts that are available on your cryptocurrency exchange.
Using Fundamental Analysis to Pick Cryptocurrencies
Fundamental analysis is the art of using all the gossip, stories, and facts about a cryptocurrency, its financial situation, and upcoming risk events that may move the market. Here are some methods you can use to cherry-pick the best cryptos for you.
- Go with what you know:
- If you’ve already been exposed to certain types of cryptocurrencies or used them in real life and have liked their performance, consider adding them to your portfolio.
- say you notice that your favorite online store has already added a cryptocurrency payment option to its checkout page and you place an order with it smoothly. That success may be an indication that the trading volume for that cryptocurrency will increase in the future, and the crypto may become a valuable asset for your portfolio.
- Choose the right categories:
- Another way to pick the best categories for medium-term investments is to choose from categories that are already outperforming the overall market. I’m not talking about a category that did well just today but rather something that either has been doing well for a few months or even years or is showing signs of picking up. You can pick the hottest category as your top pick and then add on the second and third ones for diversification purposes.
- Check out cryptos’ websites:
- Whether you have a number of cryptocurrencies in mind based on your own experience or you’ve picked a category and now want to choose the best crypto within that sector, you must now start a more detailed analysis on your finalists.
- Flip through their white papers:
A white paper is something like a business proposal for new cryptocurrencies. It includes everything potential investors need to know about the crypto, such as technology, purpose, financial details, and so on
- Identify their teams:
No one really knows who created Bitcoin, but the rest of the cryptocurrencies out there normally have a team behind them who guide the company and its blockchain technology.
- Familiarize yourself with their technology:
The more you get to know the products and the technology behind the cryptocurrency, the easier you can make your decision about the finalists on your cryptocurrency list.
- Check out their contribution to society:
What problems are your shortlist cryptocurrencies trying to solve? Does it matter to you?
- Analyze their road maps:
road maps are a great way to discover a ton of fundamental information about the crypto in a few minutes.
Choosing Cryptos with Sentimental Analysis
Without getting too sentimental, here are some essential elements to check before setting your heart on your favorite cryptocurrencies.
- The crypto community:
Many cryptocurrencies directly depend on the participation of their communities, like miners and developers. Most of the crypto communities have their own forums on places such as the following:
— Reddit (www.reddit.com/)
— Bitcointalk (https://bitcointalk.org/)
— Steemit (https://steemit.com/)
- Exchanges that carry the crypto:
- You want to make sure that your cryptocurrency exchange carries your cryptos of choice,but choosing cryptos that are listed on many different exchanges is also a good idea.
- Volume means how much cryptocurrency got traded in a specific time frame. It’s important because it tells you how easily you can buy or sell that cryptocurrency. The higher the volume, the more easily you can trade it off. Look from www.cryptocompare.com or www.coinmarketcap.com
- Coin market capitalization
One of the fastest ways to navigate through cryptocurrencies is to check out their ranking based on their market capitalization, or market cap. A bigger market cap shows a higher value of all units of a specific cryptocurrency that are for sale right now.
- Circulating supply
Circulating supply (CS) is the number of coins or tokens that people have mined or that companies have generated. The key is that the circulating supply number shows you how many of these coins are currently in the market and that the general public has access to.
Trying Technical Analysis to Select Cryptos
The golden rule to any type of investment comes down to four important words: “Buy low, sell high.”
- Technical analysis basics:
So many fabulous tools and gadgets can help you understand the historical movements and patterns of a cryptocurrency’s price. By discovering how each pattern and indicator works, you can have a higher accuracy in predicting future price actions.
- Recent price action:
Although the current price of one coin isn’t a very good indicator of a cryptocurrency’s overall value, analyzing the price action becomes very important when you’re trying to figure out when to buy and sell. You can check the most recent price action of your selected cryptocurrency on websites such as https://coinmarketcap.com/ to see how much the price has dropped or surged in the past day, week, or even months.