How to Choose the Best Crypto Investment for 2024?
Cryptocurrencies have positioned themselves as investment vehicles with a potential for big earnings. But with so many digital coins and tokens available, picking the best cryptocurrency to invest in is not an easy task. This article will help you make an informed decision to start investing in crypto in 2024.
Why Should You Invest in Cryptocurrencies?
Before recommending what crypto to buy, let’s discuss why anyone should buy cryptocurrencies in the first place. The following are some of the main reasons:
- The blockchain technology that cryptocurrencies use to validate every transaction is disruptive. It has the potential to transform many industries like banking, shipping, and even healthcare. Investing in cryptocurrencies is a way of supporting the future of technology while earning high returns.
- Cryptocurrencies offer a reliable way to store value. They are not affected by inflation, bank failures, or other disastrous events. Governments cannot tax or confiscate crypto assets without the owner’s permission.
- The possibility of high earnings within a relatively short time. Most cryptocurrencies are highly volatile. This means that the price of a digital coin can have tremendous growth in a matter of a few hours. By making the right buy-sell decisions, one can make huge profits. However, profitable crypto trading requires a good understanding of the market. Volatility means that the price of a cryptocurrency can also plummet suddenly.
Next, let’s briefly review some of the common crypto trading and investment techniques.
Benefits of Crypto Trading
The rapid price movements that occur within a day open the opportunity to make quick earning by trading cryptocurrencies. Besides, crypto trading has additional benefits such as:
- The ability to trade cryptocurrencies 24/7. Since the crypto market is not governed by any central institution, transactions take place at no specific hours.
- Unlike the stock market, the crypto market is practically unregulated. Traders are not limited to the number and frequency of their trades. There are no restrictions on experience, assets, or even age. Anyone can start trading crypto straight away.
- The crypto market is quite transparent. The data to make trading decisions is usually open for anyone to see on the different crypto exchanges.
Day trading is arguably the most common crypto trading strategy. If properly executed, it can be very lucrative. However, it also carries risks. Hence, risk management is a must to avoid incurring serious losses.
Choose Your Level of Risk
Critical to the success of crypto trading is identifying correctly when to buy and sell a specific asset. There are several ways to decide the best moments to buy and sell. However, it all boils down to the level of risk you can tolerate.
You should consider that it will be almost impossible to always buy a digital asset at the absolute bottom. Likewise, you won’t be able to always sell at the absolute top. You have to set conservative limits that allow you to buy at a price that’s comfortable with you. Also, you have to set a limit below which you have to sell in the case of a sudden depreciation.
To many, Bitcoin (BTC) is the best crypto to buy. Because of its long time in the market, Bitcoin has a solid base of supporters. But other cryptocurrencies, known collectively as ‘altcoins,’ represent good investment opportunities also. Ethereum (ETH), Litecoin (LTC), and Ripple (XRP) are among the best altcoins to buy.
But unlike Bitcoin, some altcoins carry a higher level of risk. A good strategy to reduce this risk is to diversify your investment by creating a portfolio with different digital coins. Besides Bitcoin, you should also invest in one of the so-called stablecoins. The values of these digital coins are pegged to the values of stable assets like fiat money. This adds some level of protection to your entire portfolio.
Look into Lesser-Known Crypto Exchanges
A blockchain project often looks for capital through an initial coin offering (ICO). It involves the sale of a new cryptocurrency or digital token. An ICO offers a great opportunity to profit, but it is also quite risky. To invest in a new cryptocurrency, you must understand the blockchain project behind it thoroughly. In this way, you can foresee whether it is viable.
You have to be constantly on the lookout for promising ICOs. If you miss a good one for a reason, you still can purchase the new digital asset through an exchange. Look into lesser-known exchanges since established ones are less likely to list new coins. Also, a lesser-known exchange will not limit your purchase.
Conduct Independent Research
Before you buy digital coins during an ICO, conduct thorough research on the project and the people behind it. Check whether the developers have the leadership and technical background to complete the project successfully. Make sure you understand the business scheme (if any), and the main technical features. Preferably, invest in innovative ideas with bright prospects.
Likewise, before you purchase any established cryptocurrency, research the coin thoroughly. How to research cryptocurrency? You can begin by checking market capitalization and circulation. The price of the asset, although important, should not be the sole criterion to decide whether to buy or not.
Investigate the entire history of the coin, and try to identify stability. Avoid cryptocurrencies that have shown enormous drops in market capitalization. In most cases, cryptocurrencies that are losing demand show this type of behavior.
Long-Term Cryptocurrency Investment
The cryptocurrency market opens the possibility to enormous gains. But crushing losses is also a plausible outcome. Hence, a strategy to reduce the risk of loss is a long-term crypto investment. However, not just any coin is suitable for such type of investment.
Choose a cryptocurrency that has shown bullish behavior over the years. It probably will do well in the long run. A good example is Bitcoin. Even though the price of this cryptocurrency has had some ups and downs, the price has shown an upward trend in the long term. In the case of a new cryptocurrency, viable and innovative projects are the safest long-term investments.
Short-Term Cryptocurrency Investment
For immediate gains, short-term crypto investment is an alternative, yet riskier. To pursue this type of investment, you must define a risk-reward ratio you can tolerate. For short-term investments, Bitcoin and Ethereum are suitable coins as they lead the market. Hence, any price drop is possibly followed by a recovery, unlike other cryptocurrencies.
What Are the Best Cryptocurrencies to Invest in 2024?
After this general review, we’ll go over the main point: the best cryptocurrency to invest in 2021. It is difficult to single out the ‘best’ cryptocurrency. Remember, the crypto market is quite volatile. As a consequence, the best cryptocurrency to buy right now may not be so in a few months or weeks. However, we can provide a list of the most promising digital coins. You can just pick one from the following list.
1. Bitcoin (BTC)
Bitcoin was released in 2019 and has dominated the crypto market ever since. Most investors consider it the safest investment in the crypto space. Bitcoin was conceived as a decentralized peer-to-peer (P2P) cryptocurrency. It means that all transactions take place directly between the involved parties without intermediaries like a bank.
As of today, Bitcoin is accepted as a valid payment method by several retailers. With a mobile Bitcoin wallet, you can even use this cryptocurrency to pay at restaurants, cafes, and shops. It has a maximum supply of 21 million BTC coins.
2. Ethereum (ETH)
Ethereum is a decentralized blockchain network. Its native cryptocurrency is Ether (ETH). Ethereum functions as an open-source platform for other tokens and cryptocurrencies. It also offers functionalities like smart contracts. Ethereum is the second-largest digital coin by market capitalization. Consequently, it is also considered a safe crypto investment.
3. Ripple (XRP)
Ripple (XRP) has been consistently ranked among the top cryptocurrencies. By total market capitalization, it has been ranked fourth just behind BTC, ETH, and Bitcoin Cash (BCH) in the first quarter of this year. Ripple is meant to be a global payments network. It will make the conversion between currencies much more straightforward. XRP is the best cheap cryptocurrency to invest in.
4. Litecoin (LTC)
Litecoin is a P2P cryptocurrency based on Bitcoin’s code. However, Litecoin aims at providing faster transactions at lower costs. It has a maximum supply of 84 million LTC coins. It also utilizes a different mining algorithm, which allows anyone with a regular computer to earn profits as a miner.
5. Bitcoin Cash (BCH)
This cryptocurrency is a fork of Bitcoin. It aims at improving Bitcoin’s privacy, transaction capacity, speed, and fees. With a total supply of 21 million BCH coins, this cryptocurrency combines scarcity with easiness to spend.
Bitcoin Cash allows micro-transactions owing to its low fees. It can be used even for tipping in restaurants. This cryptocurrency is accepted as payment for goods and services by many online and in-store retailers. It is arguably the most potential cryptocurrency to replace fiat money in the future.
6. TRON (TRX)
TRON is an operating system that aims at making blockchain technology more suitable for daily use. It enables faster crypto transaction processing. Reportedly, TRON can handle up to 2,000 transactions per second (TPS). As a comparison, Bitcoin and Ethereum can handle 6 TPS and 25 TPS, respectively. The TRON platform also focuses on content sharing and entertainment. The TRX cryptocurrency is used to reward content creation and sharing on the TRON platform.
7. EOS (EOS)
EOS is a software platform that allows developers to embrace blockchain technology in the easiest possible way. The platform has been extensively used for building decentralized apps (DApps). The native cryptocurrency of this platform is also named EOS. This project has the ultimate goal of improving the user experience on different blockchain platforms.
8. Dogecoin (DOGE)
Dogecoin is unique. It was created in 2013 as a joke. However, the coin gained interest from many crypto enthusiasts. As of today, Dogecoin is widely used for tipping on social media platforms like Reddit and Twitter. Some retailers accept it as a payment method. There’s no shortage of this coin, which makes it very easy to acquire.
9. Cardano (ADA)
Formally launched in 2017, Cardano has one of the most promising and ambitious blockchain projects out there. The Cardano platform will allow innovators and visionaries to create positive global change through the use of blockchain technology. The ADA token allows holders to take part in the operation of the network.
10. ZCash (ZEC)
ZCash is a cryptocurrency that emphasizes privacy and anonymity. Most cryptocurrencies are not completely anonymous. For instance, Bitcoin’s blockchain allows the tracking of transactions for the sake of transparency. For those concerned with privacy, ZCash prevents transaction tracking unless the user allows it. This added layer of privacy is attracting many new users.
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