The Best Crypto To Buy Is Ever Changing
How do you even begin to decide on the best cryptocurrency to invest in? From Bitcoin to Tether, and everything in between, there are now estimated to be more than 18 thousand cryptocurrencies to invest in and when it is your first time it can get a bit overwhelming.
It is very important to choose the right cryptocurrency when first venturing into the world of digital currency investment, and also that you get the timing of your crypto entry right. To help you in your search for the best cryptocurrency to invest in, we have highlighted those with the largest market cap, and have then flagged up a few interesting contenders for different time scales.
What you will usually find in the world of crypto is that many of the most popular coins of today may well be just a passing fad that fades in time, only to be replaced by another that is attracting more media attention. That being so, there is something to be said for taking what may be a lower potential maximum return, for longevity and staying power.
If you had even close to a list of the best cryptocurrency to invest in 15 years ago, these are quite likely to be on this list again today, as the market cap has swelled and a following has been established over time.
It is becoming more and more difficult as the months pass to spot what is more of a short term pump, from a longer term trend. As such, if you are keeping your risk on the lower end of the scale, you will likely want to consider something from the largest market cap cryptocurrencies.
If you are taking more of a ‘moonshot’ mentality (which involves high risk for potentially life changing returns), then some of the latter list of the ‘next big crypto’ to consider may be more what you are looking for. Feel free to jump to either at your own preference.
Best Cryptocurrency To Invest In By Market Cap
1. Bitcoin (BTC) is still a dominant force in crypto markets and likely to remain one of the best for a long time yet.
The cryptocurrency with largest market cap should be no surprise to anyone. Bitcoin (BTC) holds a firm hand on position 1 in this list with a market cap of over $846 billion. Bitcoin was created in 2009 under the pen name Satoshi Nakamoto and whilst Bitcoin is the first cryptocurrency of the modern era, there were in fact several digital currencies predating by more than 10 years the modern giant.
Like with many other later cryptocurrencies that followed suit, Bitcoin is kept safe and secure by a process called Proof of Work (PoW) and mining. It is clear to see that Bitcoin’s price has tremendously increased with first mover advantage and growing usage in institutional spheres.
In May 2016, you could have bought a Bitcoin for as little as $500 but in recent times we can see a single Bitcoin is priced over $44,000 as of March 2022. This is a pretty staggering growth rate of 7,800% for what is now thought of as digital gold .
Bitcoin prices have typically risen rather dramatically in the period following each ‘halving’, but historically this has also been followed by a significant retracement to previous support levels. Previous halvings have been spread by 4 years, with the latest being 2016, then 2020.
Recent years have brought the first Country to adopt Bitcoin as its legal tender in El Salvador, the first Bitcoin futures ETF, and the reversal of opinion of a certain Warren Buffett to name a few.
All this seems to indicate that adoption of Bitcoin across wider segments of society is becoming far more widespread, and with this you could realistically expect demand to remain steady. As a cryptocurrency with a limited number of Coins (21million) that will ever be issued, the supply is limited. Any asset with a strong demand and a limited supply typically only goes one way over time.
Is Bitcoin still the best cryptocurrency to invest in? Time will of course reveal all, but if you are a Bitcoin believer, you remain in good company!
2. Ethereum (ETH)
Ethereum (ETH) is both a blockchain and a cryptocurrency platform with a market cap of over $361 billion. Whilst ETH is also on the POW model, there has been talk for a while for a desire to move to POS (proof of staking) which would drastically reduce energy consumption and likely gas fees.
Ethereum is a programmer’s favorite owing to its ability to use smart contracts (i.e. the contracts are automatically carried out when conditions are completed) and non-fungible tokens (NFTs). Whilst NFTs are not only available on Ethereum, the vast majority of the more popular collections are and the volume of transactions taking place in the NFT space is huge. This adoption gives rise to increased usage which in turn has moved price.
In recent years ETH has seen an immense rise in its value even outpacing that of Bitcoin in percentage terms. From May 2016 to the beginning of this month the prices have increased by more than 27,000% making Ethereum (ETH) the second-largest cryptocurrency by market cap and one which looks set to be here for the long run.
3. Tether (USDT)
Unlike various other cryptocurrency, Tether (USDT) is a stable coin. In saying this, we mean that the cryptocurrency is linked to fiat currencies, and in this case the US dollar. Tether (USDT) has a market cap of over $79 billion and is often used as a hedge against other more volatile cryptos or as a pair in DeFi transactions.
In short, Tether’s value remains consistent to approximately $1USD and compared to other cryptocurrencies is not one for volatility. For anyone that does not want to be involved in the extreme volatility of specific tokens, having USDT is a way of having something akin to digital dollars.
Holding Tether does mean however when the USD moves, so does your position. Times to consider USDT include if you feel that a crypto winter is coming and you want to stabilize your crypto portfolio without withdrawing back to fiat, or keeping your powder dry for new opportunities to buy back in.
4. Binance Coin (BNB)
Binance is now one of the best crypto exchanges with an ecosystem that is one of the world’s largest in the crypto sphere. You can smoothly trade and exchange various coins on the Binance platform and it is continuing to grow.
Since it was first launched in 2017, Binance Coin expanded simply by facilitating trading on the Binance exchange platform and this increased adoption.
With further advancements to Binance having been made, you can now make your travel arrangements, pay by debit card using your wallet balance, create NFTs and trade all using this much-celebrated platform. The BNB Smart Chain network has made a lot of new integrations possible.
BNB has been a huge success story with the price rising from just $0.10 in 2017 to more than $400 today. This represents an approximate rise of 410,000% which is quite out of this world.
If you are interested in this particular token with a market cap of almost $74bn, BNB can best be found and exchanged very easily within Binance Exchange directly.
5. U.S. Dollar Coin (USDC)
Like Tether, US Dollar Coin (USDC) is also deemed as a stable coin in this otherwise volatile market. This is because the cryptocurrency is ‘backed’ (in some ways) by US dollars and attempts to remain parity of 1USD to 1USDC.
The use cases of USDC are largely similar to that of USDT in that it is most commonly used as a hedge in other transactions or trades. With a market cap of over $53 billion, USDC sits at #5 on the list for total size.
6. Solana (SOL)
Solana was developed to help cater for smart contracts, promote decentralized finance (DeFi) uses, NFTs, and power decentralized apps (DApps). With a stated achievement of being the fastest blockchain in the world, this is one cryptocurrency that although more recent, has been on a meteoric rise.
Although just 2 years old at the time of writing, the market cap of Solana is already over $40 billion. It runs on a unique hybrid proof-of-history and proof-of-stake mechanisms to quickly process transactions whilst keeping the record secure at the same time.
NFTs on the Solana network whilst not as popular as those on ETH can be processed with significantly lower energy consumption, and gas fees. Whether this particular aspect of Solana continues to grow and develop could be critical towards future price targets.
When it was first launched in March 2020, SOL’s initial price was around $0.77 and by this month it has gained more than 13,000%.
7. Avalanche (AVAX)
Avalanche (AVAX) has a market cap of over $22 billion and is a somewhat similar cryptocurrency to Ethereum. It provides automated blockchain software to process smart contracts using its’ native token and claims to be the fastest smart contract chain network available.
Avalanche has grown rapidly over time thanks in part to its low gas fees and faster processing speeds, along with a range of adoption use cases. There are a large number of DeFi projects running on Avalanche, with a wide range of liquidity pools and staking platforms built on the infrastructure.
From March 2020 to March 2022, AVAX’s price range has increased more than 1,840% from a mere $4.63 to $89.84.
Why Invest in Cryptocurrency?
Investing in cryptocurrencies like Ethereum and Bitcoin can be seen as a higher-risk investment because of the volatile prices of digital currencies in general. Whilst some newer projects go wrong (either as a scam or poorly developed infrastructure) another can produce life changing returns for investors. It is this upside opportunity in what is still a relatively new industry that continues to attract new investors to cryptocurrency.
The adoption from institutions usually precedes bigger movements in price and less volatility over time. Whilst we are seeing an increased amount of institutional adoption in the big coins like BTC and ETH and even NFTs in recent months, this is not feeding through yet into many of the other Web 3.0 projects and DeFi.
If you are planning to invest in cryptocurrency you will first need to find a reliable and trusted trading platform. You will also need to decide whether you are best suited to a centralized or decentralized exchange.
Cryptocurrency is surely not everyone’s cup of tea and that is not necessarily a bad thing. Whilst crypto enthusiasts could remain attached to this niche for many years ahead, others could lose interest and change the dynamic of the markets. Going back to the institutional adoption however, with a high number of businesses now accepting cryptocurrency, it is fair to say that crypto may well be here to stay!
Some of the big multinationals that have started accepting crypto payments include Tesla, Starbucks, AMC Entertainment, Casinos, CFD brokers, and many online payment providers. This is just skimming the surface still.
Whilst all of the above may well be good reasons for investing in cryptocurrency, whether this will benefit you in the long run is a question you need to ask yourself based on your own trading strategy and plan. Before deciding on the best cryptocurrency to invest in, you will need to do extensive homework and then decide on how much of your portfolio percentage wise you are prepared to allocate to any one cryptocurrency.
You can decide to take your steps into the crypto market with CFD or leveraged crypto platforms, futures, options, or direct via spot. Regardless of how you get involved in crypto, you need to spread risk.
The best way to invest in crypto and spread risk is with a portfolio approach. This means spread your total investment capital across multiple different cryptocurrencies to distribute and diversify your risk. Consider 5 to 10 of the best cryptocurrencies to invest in, and spread your capital across each one.
If you get this portfolio approach right, even in the case of a couple of blunders you could still end up in a positive scenario overall. We have broken down an example below with some target prices but before we get to that, as with all risk assets, it is suggested to invest only what you can afford to lose.
|Volume||Entry Price||Entry Total||Exit Price||Exit Total||% Return|
You will see from the example above that a portfolio approach to your crypto investing could help you to mitigate losses from certain positions with an uplift in others. Even in the case put forward where 5 cryptos are losers, 4 completely to 0, the portfolio is up by almost 20% at the end of the period when all is settled.
It is likely that if you are picking some of the best cryptocurrencies to invest in that significantly more than 6 out of 10 will be in existence in future periods but the example is there to give you an idea of what a properly balanced risk portfolio can look like in a high risk market. In normal circumstances, you will have some winners, along with some losers, but sticking in there and keeping your portfolio alive in spite of the losers is the way you win long term.
How to Decide on the Best Cryptocurrency to Invest in?
Picking through the potential best cryptocurrency to invest in from the list of all available options can be quite an impossibility. The next big cryptocurrency is something everyone is looking for but understanding which digital currency in a given time frame is going to be next to ‘moon’ can be a daunting task.
In a time when the markets are deadlocked, you might think that the risk factor is higher than usual but actually this time of relative pause can give you an opportunity to pick through the noise. Taking the time to focus on a few of the points below may well help you in your search;
- Market Capitalization
As a beginner, you must rank cryptocurrencies and compare them based on their market capitalization. This is an appreciable way to make a calculated decision. Rank every digital currency you are interested in and analyze its value from the total market capitalization of USD 2.79 trillion.
Bitcoin and Ethereum alone make up 64% of the overall market capitalization at the moment so your question is whether they will continue to hold that, grow it, or whether the next big cryptocurrency is going to eat into that market share.
- Current Supply & Total Coins to be Mined
It is advised to consider the total number of coins that are circulating in the market as well as the potential maximum supply. For instance, Bitcoin’s supply of coins is limited to 21 million. In August 2021, 18.3 million coins are already in circulation which means there are only a further 2.3 million coins, or c.10% remaining to be successfully mined and added to supply.
Whilst many beginner traders look at the actual price of a coin when looking for the next big cryptocurrency, there is often a tendency to lose track of the maximum potential supply along with market cap. These two things combined, along with a target market cap can give you a better idea as to the maximum potential value of an individual token more than just the actual price can.
- White Paper
Every cryptocurrency typically comes with a white paper that includes the purpose and the vision of the coin. The details mentioned can include the type of technology it uses along with the creator’s vision of creating the coin.
If the white paper seems realistic and appropriate, you can then consider investing in the coin with your initial investment.
- Use Cases
Look for potential use cases in the white paper as this will help to drive an increased acceptance ratio among other traders and/or investors. The greater the number of use cases, usually correlates with a greater potential maximum value of a coin.
The more that people or institutions use a cryptocurrency, the higher the amount of transaction fees, the higher the demand. All this equates to a higher maximum market cap, and a better potential return on your outlay.