Due to the rapid development of Blockchain technology, a series of other cryptocurrencies were born to serve different purposes, attracting many investors to participate in the market. Cryptocurrencies are becoming one of the most invested assets. So what is smart cryptocurrency (coin) investment? What are the top cryptocurrencies worth investing in in 2020?
The cryptocurrency market in the first quarter of 2020
The first quarter of 2020 marks a period of global economic crisis due to the strong impact of the coronavirus. Although the cryptocurrency market has always been considered a haven channel, it seems that this time the impact of the translation is too great, making cryptocurrency transactions bleaker.
This action caused Bitcoin to lose 10% of its value in the first 3 months of 2020 even though it achieved a significant 30% increase in January thanks to tensions between the US and Iran.
Bitcoin's depreciation is also one of the reasons why the market capitalization of cryptocurrencies also evaporates 5% of the value. This is understandable because basically, BTC is still the cryptocurrency with the highest value and liquidity in the market.
It seems that the major cryptocurrencies have tended to decrease at the beginning of 2020 but have now increased again
General characteristics of the crypto worth investing
Every investor participating in the crypto market wants to buy the best coins to maximize their profitability. However, the evaluation of any cryptocurrency is "good", not everyone can do it. Experienced investors now rely on the following common characteristics to evaluate a coin to see if it is worth investing in:
In essence, cryptocurrencies are the most reliable market for long-term investors. So to determine whether to invest in a coin or not, the first issue to consider is the stability of that coin.
- Growth rate
Growth is at the core of every process of assessing any asset commodity and so is the cryptocurrency market. Looking at the growth of the coin will show us its future development as well as make forecasts about the value of the coin over time in the market. that investors will choose short-term or long-term investment for good coins.
- Technology that makes coins
Because of their nature as coins, the technology that makes up the coin has always been a criterion of its long-term development. Although currently most major coins like BTC, XRP, ETH operate under a common model and they connect.
However, if you find a new coin and it has a different operating model but has a future that can compete with the models of the current top coins, you should consider investing early in it.
The rules when choosing cryptocurrency investments
۞ Rule 1: Read the Whitepaper
A whitepaper is a document designed to explain all the issues associated with the coin's formation and core value. Also, it provides other extremely important information such as the future goal of the coin and the group behind it. The whitepaper should be read first during the process of understanding the coin so that investors have a look at the future of the operation as well as the potential value in the future.
۞ Rule 2: Understanding market capitalization
The number two rule of assessing a coin before deciding to invest in it is that you need to check the supply and price of a coin in the market.
Only pay attention to coins that have at least 80% of the number currently circulating in the market because only when this rate is reached will the liquidity of the coin be considered acceptable.
Note: Don't buy a cryptocurrency simply because they're cheap!
۞ Rule 3: Check transaction volume
The liquidity and trading volume of money are an important metric in assessing its future development.
Coins with high transaction volume prove that it is gaining high recognition from investors around the world and this indirectly guarantees the future of the coins themselves in the market. then, its trading volume must increase in proportion to its value.
Cryptocurrencies are worth investing in 2020
★ Bitcoin (BTC)
Bitcoin has always been the top choice of the top potential coins in 2020. All indicators of market capitalization, transaction volume as well as the number of coins circulating in the market always show signs of money. This will continue to grow strongly in the future.
As a currency that represents the power of the entire cryptocurrency market, no matter what other cryptocurrencies you own, they are related to BTC.
Many experts around the world like PlanB have predicted that the price of BTC could reach $ 100,000 in the next few years, and if you can invest in it as a long-term goal, you should try it.
★ Ethereum (ETH)
It is the second-largest coin after BTC and is considered to be a perfect replacement for BTC itself because of its versatility and transaction speed compared to BTC.
★ Ripple (XRP): Cryptocurrency for banking and finance
The third-largest market capitalization after BTC and ETH. Like ETH, the transaction speed of Ripple XRP is also very fast in seconds at a low cost. What makes Ripple different from BTC is that it harnesses the power of cryptocurrencies to use in trading.
XRP is completely not a version of BTC because this coin has a completely separate market. XRP is currently used by many banks and financial institutions.
With these outstanding potentials plus the very well received by investors expressed through trading volume and market capitalization, which is always among the top coins, XRP is well worth consideration of long-term investment form.
The best cryptocurrency investment strategy for 2020
● Strategy 1: Start with small deals
As with any financial investment, when you first start, invest a small amount to get used to the market.
This gives you both hands-on experience in investing on the other hand if the risks occur you have the opportunity to start over.
● Strategy 2: Invest in multiple coins at the same time
It's not always a good idea to invest in the top coins, so instead use only 60% of your investment in the top 5 most valuable coins and the rest is divided into much of the allocation goes to other potential altcoins
● Strategy 3: Choose a suitable investment form
After taking a long time to understand the market as well as potential coins, the next thing you need to do is determine the appropriate investment form for each corresponding coin. There are many different forms of investment:
Long-term investment (Hold): is the form of investment in which you will own the coin for a long time (maybe up to years) and wait until its value reaches the expected price of yourself. In the process, you will continue to buy coins if they go low. However, this form of investment is only suitable for coins with great potential and strong development such as BTC and ETH.
Short-term investment (trade) is a form of investment that you will rely on the daily price fluctuations of coins to make a profit based on those price differences.
This form requires you to look for coins that have not too large transaction fees and fast money movement speed in seconds. This form is not suitable for BTC investment but only suitable for coins like XRP, ETH ...
● Strategy 4: Keep a distance in cryptocurrency investing
Investing in cryptocurrencies can create wealth for you, but be alert for tempting information in this market.
It is best to treat your investments as your working capital and for emergencies only. Restructuring one's cash reserves and investing in this market to a moderate degree is encouraged by experts rather than putting all its assets into it.
Above are a few strategies to help you invest cryptocurrencies most effectively. If you have any questions, feel free to leave a comment. We will answer your questions as quickly as possible.
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