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While deciding on the right crypto for investing, you should follow allow asset allocation to diversify among versatile asset classes – including cryptocurrency – and then diversify among versatile cryptocurrencies to far reduce risk.
According to data published on the CoinMarketCap web site, as of 13 November 2021, there were 14,106 cryptocurrencies with a total commercialize capitalization of USD 2.7 trillion deal at 430 exchanges globally. Given these numbers, it is identical easy to get overwhelm and be confused about which cryptocurrencies to choose for investment. In this article, we will see how you can shortlist the properly crypto coins to invest in .
There are many things to consider when choosing a cryptocurrency for investment .
hera are four important factors :
1) Market capitalisation
Ranking cryptocurrencies based on grocery store capitalization is one way of selecting them for investment. here is a list of the top 10 cryptocurrencies ranked by marketplace capitalization .
Table: Top 10 cryptocurrencies based on market capitalisation
( beginning : hypertext transfer protocol : //coinmarketcap.com/ )
eminence : Data is as on 13 November 2021 .
As seen in the above table, out of the total market capitalization of USD 2.79 trillion for all cryptocurrencies, Bitcoin ( 43 % ) and Ethereum ( 19.6 % ) together put up 64 %. therefore, these are the bluechips of the crypto world. accordingly, you can choose to invest some money from your overall cryptocurrency allotment in these two .
Related : Leading Crypto trade Platforms In India
2) Total coins to be mined and current supply
Look at whether there is going to be a limited supply of a particular cryptocurrency. You should besides consider the number of coins that are already in circulation. For example, Bitcoin ’ s overall add is limited to mining 21 million coins only. As of August 2021, 18.7 million coins are available, with merely 2.3 million more coins to be mined .
The necessitate for Bitcoin is increasing with every authorize day as more and more people are investing in it. But issue is limited. The increase in demand and circumscribed supply leads to an increase in the price of any digital asset, and the same applies to Bitcoin besides. thus, while deciding which crypto to buy for investment, you should check what will be the overall supply and how much of it is already in circulation .
3) White paper
Every cryptocurrency has a white paper that mentions all the details of the mint, like the purpose for which it has been created, the problems it will solve, the technology it uses, etc. The white newspaper besides mentions the vision of the coin ‘s creators. If the white wallpaper seems realistic, you may consider investing in the coin with an initial come .
Over time, you can gauge whether the vision mentioned in the white wallpaper is getting implemented in the actual world. If yes, it will reflect in the measure of the coin going up. accordingly, you may take a call on investing more in the specific cryptocurrency .
Related : Bitcoin, Ethereum, Dogecoin : Everything You Need To Know For successful deal In Cryptocurrency
4) Use cases
One of the authoritative things mentioned in the white paper is the coin ‘s use cases. It is one of the main factors that will drive acceptance among its users/investors. Over time, new use cases may get developed. The more the number of use cases, the across-the-board the mint ‘s credence will be, and the more the addition in its value .
Let ’ s consider an exemplar. Technology-wise, Ethereum presently has one of the best use cases. It is because of these habit cases that Ethereum has the second gear biggest market capitalization after Bitcoin. It might be one of the best cryptos to buy now .
If the mint ’ randomness use cases go down, the probability of the coin ’ s value going toss off and the coin not surviving will be higher. so, you may consider the coin ’ s use cases as a key agent while deciding on the best cryptocurrency to buy.
As an investor, you should follow appropriate asset allocation. At a broader level, you should diversify in respective asset classes such as equity, debt, aureate, real estate of the realm, and cryptocurrency investments. And within crypto, you should further diversify into diverse cryptocurrencies. You can do this based on factors such as market capitalization, need and supply, practice cases, etc. last, barely as with reciprocal fund SIPs, it ’ sulfur better to invest small amounts regularly quite than plonk down a hunk sum at one sound .
disavowal : This article is intended for cosmopolitan information purposes lone and should not be construed as investment or tax or legal advice. You should individually obtain mugwump advice when making decisions in these areas .