How To Spot The Best Crypto Investment Opportunities

crypto investment tips

Introduction

Successful investors don’t heavily rely on luck. Instead, one major reason for their success is due to the fact that they had the foresight to spot the best investment opportunities. This is particularly true when it comes to cryptocurrencies. Initial bitcoin investors, for example, are now extremely wealthy. There are now nine cryptocurrency billionaires listed as of April 2021. With an average net worth of USD $8.7 billion, Sam Bankman-Fried is the richest crypto billionaire in Forbes’ April 2021 ranking of billionaires.

The primary reason crypto investors ended up on the billionaire list is that they invested in a coin back when it still had an affordable price, and they held onto their investment. Due to bitcoin’s price explosion, rendering plenty of casual crypto investors millionaires, plenty of new and experienced investors are looking for the next successful cryptocurrency. The question, however, is how to know and find the next coin that has a massive chance of taking off in the future.

With that said, before you use AI crypto trading in making the entire process of crypto trading convenient for you, consider these tips to spot the best crypto investment opportunities:

Understand the Market

Before knowing the best crypto investment opportunities, have a firm understanding of the crypto market. Similar to conventional markets, it’s always advisable to refrain from buying shares in a company whose business plan you don’t comprehend. In other words, if you don’t exactly know how the company is controlling or making its money, don’t invest in it. This same principle applies to crypto investments too.

Remember, it’s a given fact that cryptocurrencies have the potential to increase in value, but the investment can also be true. Even if this concept applies to traditional stocks, cryptocurrency is still relatively new, which means it still has more speculative potential. Thus, before investing in any coin, conduct much-needed research to understand it.

Moreover, once you’ve understood the crypto market, consider these tips when investing in any type of cryptocurrency:

  • Always maintain a healthy portfolio.
  • Invest what you’re willing to lose.
  • Don’t base your investment decisions on hype.
  • Start small.
  • Prioritize safety and security.

Visit and Monitor Reliable Community/Forums

The primary reason for a cryptocurrency’s popularity is its followers. Hence, search for a type of cryptocurrency with strong and loyal followers. A solid community is a critical indicator that plenty of people are genuinely interested in the particular crypto. That’s why large and popular cryptocurrencies have very active communities, especially on Reddit.

With that said, before investing in a coin, search relevant subreddits, reliable forums, and even YouTube channels to assess what people are saying about your potential investment. Furthermore, you can also check the sources above if you want more information about a particular coin. Some posts or discussions will even provide helpful charts that’ll allow you to absorb information better, giving you peace of mind that the coin you’re about to invest in will bring you a high return on investment.

Spot Consecutive Pullbacks and Rises

More often than not, if a cryptocurrency’s price suddenly rises then has a steady decrease followed by a sudden rise, there’s a considerable chance that a bigger rise is about to come. This is because consecutive rises of this nature are the coin’s attempt to break a new all-time high, upper resistance price, or a break of the existing resistance.

Still, don’t be discouraged that the coin’s value will decrease. After every consecutive rise, there’s always a pullback, as this is part of the coin’s consolidation process. Simply put, pullbacks after consecutive rises are good for the coin’s stability, which is a major factor for the coin to become a good investment opportunity.

Analyze the Coin’s White Paper

The developers behind every cryptocurrency will come up with a white paper whenever a coin raises money for an initial coin offering.

The white paper is a document that contains the following information:

  • The nature of the project––the white paper will provide the vision, goal, and technology behind the coin.
  • The amount of money required for the project.
  • The number of coins or tokens allocated to all investors. For your reference, the fewer tokens issued, the higher their value.
  • Length of the campaign

This document contains the coin’s risks and opportunities. The document may even explain if a coin holder will have voting rights or if the token is going to pay out dividends.

If the white paper is too good to be true, be cautious. Also, if the white paper is unnecessarily complicated––too much jargon, vague explanations, complicated English, and more––be wary as it may reflect the developers’ incompetence. But the diagrams, formulas, and statistics in the white paper are meant to bring in investors.

Look for Positive News

A rise in value is generally followed by positive news. This includes new partnerships, listing on a popular platform, and modules and applications related to the specific crypto. Also, if there’s something positive related to Bitcoin, it’s time to invest in other coins, as the former serves as the driving force of other cryptocurrencies.

Oftentimes, the good news is just anticipation. For instance, a listing will become popular on an exchange platform for a certain duration in the future. This news is good as it can generate hype, driving a specific coin’s price weeks before the anticipated listing happens.

The Takeaway

Nowadays, cryptocurrencies are gradually being accepted as a viable asset for investment. However, cryptocurrencies that can be invested in, as well as any crypto-related services and products, are still relatively small, which means they demand careful evaluation. Fortunately, the tips above help you find new crypto coins that have the potential to be the next big thing.

Always remember that cryptocurrencies are high-risk investments. Even if there are plenty of people who became millionaires due to their crypto portfolio, there are investors who watched their money disappear too. Thus, if you’re not confident with this venture, talk to a finance professional. By doing so, you’ll know if investing in cryptocurrencies is in line with your financial circumstances and overall goals.

References:

  1. “The Cryptocurrency Tycoons On Forbes’ 2021 Billionaires List”, Source: https://www.forbes.com/sites/johnhyatt/2021/04/06/the-cryptocurrency-tycoons-on-forbes-2021-billionaires-list/?sh=440efd0225e2
  2. “5 Ways to Smartly Invest in Bitcoin”, Source: https://www.finextra.com/blogposting/20333/5-ways-to-smartly-invest-in-bitcoin
  3. “A step-by-step guide to understanding a crypto whitepaper”, Source: https://www.cnbctv18.com/cryptocurrency/a-step-by-step-guide-to-understanding-a-crypto-whitepaper-12393132.htm

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