Specialists predict that the global blockchain market will reach $69 billion in the following two years, which could only benefit the crypto sector that relies heavily on blockchain technology. The emergence of blockchain technology has powered the creation of cryptocurrencies like Bitcoin and Ethereum and encouraged investors to make bold decisions and include volatile assets in their portfolios.
Suppose you want to join a group of individuals considering adding cryptocurrencies to their portfolios; you might wonder what the best choice is considering that Bitcoin price increased recently. Your specific needs will decide the perfect cryptocurrency for your portfolio, but this article could also help you.
Establish what your investment goals are
Before purchasing cryptocurrencies, it’s paramount to define your goals. When you started your investment portfolio, you had a purpose in mind, which might or might not have changed along the way. Try to determine what you expect from your investment in the following months and years. Establish your short and long-term goals and how you want to explore the idea of portfolio diversification.
Once you establish your objectives, you can narrow down the list of digital currencies you can purchase because only a couple of them will align with your investment strategy.
Research
Suppose you know what your goals are; it’s time to research the industry and technology behind the crypto assets to understand how they function and make an informed decision. You will learn that each project is built on a different platform type and relies on unique technology, so it has special capabilities and features. Take your time to figure out how blockchain technology works and how it powers the cryptocurrencies you are interested in. Before purchasing cryptocurrencies, list projects with strong fundamentals to lower the risk associated with this kind of investment. Make sure the team behind the project is actively involved in improving it and the project has diverse use cases.
Read the white papers for the projects that draw your attention, join community forums to find out what experiences other investors had with the cryptocurrencies you want to buy, and look for expert opinions to figure out where the market might be going.
Have a look at market dynamics
While some cryptocurrencies like Bitcoin and Ethereum are always trending, other smaller projects have their popularity moments, and if you want to add them to your portfolio, you should ensure you purchase them when they’re on an upward journey. Analyzing market dynamics will help you identify those projects trending at the moment, so have a look at the trading volume, industry trends, and available liquidity to figure out the level of possible growth and stability of the cryptocurrencies you have on your list. You should also pay attention to how much community support the cryptocurrencies get because they are volatile digital assets whose prices vary according to the market sentiment. Regulatory development also impacts their value, and you shouldn’t neglect reading them. If an asset is widely adopted, the chances of maintaining a high price and gaining value over time are also increased.
Research the team behind the project
In the crypto sphere, the success of a project often depends on the skills of the developers and community supporting it, so it’s essential to learn more about the team behind it. Invest in projects led by experienced people and supported by a strong and engaged community. If you have never heard of the developers, you might want to skip purchasing a particular cryptocurrency because the project might lack a real-world use case and be wiped from the market overnight. An active community is a good sign, and all big cryptocurrencies have one.
Where can you find a cryptocurrency worthy of investing?
Now that you know what factors should impact your decision, it’s time to start looking for projects to add to your portfolio. Where do you start the search? Navigating the intricate crypto ecosystem could be confusing even for an experienced investor.
Crypto exchanges – As one might expect, crypto exchanges are the most popular and reliable places to find new projects. Make sure you trade digital currencies with a reliable and well-known exchange to protect your security.
Data aggregators – these are informative resources because they gather information about a specific topic and provide you with all the knowledge necessary to find the best digital currency for your portfolio. You only have to search for the projects on your list and read the information they provide. Invest time and research into finding the cryptocurrency to diversify your portfolio with because it’s essential to limit the risk when trading digital assets.
Social media – you most likely spend a great part of your day on social media, so you should better use it to your advantage. Project developers and supporters use social media to announce the latest information about cryptocurrencies, so you should follow their profiles to stay up to date with everything in the crypto sector. Social media is also a powerful trigger when it comes to crypto evolution because when supporters like Elon Musk express their opinions on social media, they directly propel particular projects into the spotlight. You can also use social media to research cryptocurrencies because you can find their official pages, their developers and founders, and the news surrounding them online. Use specific keywords to search for information, and you will learn everything you need to know.
Websites – all reliable crypto projects have websites where you can find the necessary information about the cryptocurrency. They are extremely helpful because gather all data in one place so you can figure out if the project is suitable for your needs or not. You can also use directories to compare different projects. Suppose you limited your search to a handful and now you want to identify the ones that will bring the best return on investment.
By considering the above recommendations, you can decide which cryptocurrency is a good fit for you. Make sure to always stay informed when investing in the crypto sector because things change daily.