Think of the lucky ones who invested in Bitcoin at the time of its birth. Some just got lucky that their predictions about the cryptoasset cam true. Others had the foresight to buy at low prices and the discipline to sell at the right time. Many early adopters are millionaires today. Crypto enthusiasts today are in the hope that believing the old adage, “History repeats itself” comes true for them as well. In the wake of Bitcoin’s price explosion and increasing number of cryptoassets flooding the market, could we really witness ‘the Bitcoin’ saga again?
Well, it cannot be assured for certain, but if yes, how could it be identified? How could an investor predict the next Bitcoin? Let us have a look at a few factors.
#1 Price/ Market Capitalisation
When it comes to making an investment in cryptoassets, it is crucial to scan the prices and market capitalisation. For a starter or an average investor who does not have a great deal of money, it is a safer bet to invest in assets with low values. If one day the asset experiences an outburst, the investors would provide the best value for your money.
It is also advisable to diversify your investment. Rather than putting a total sum into one asset, it would be better to distribute it among multiple altcoins. For example, assume an investment of ₹2,00,000, with today’s prices could fetch you only half of a Bitcoin, around 30 Litecoin but thousands of coins of some other low valued cryptos which could someday make you rich. For example, you look for Litecoin, Ripple and Bitcoin Gold that show great potential. Diversification of investments with low-valued coins is advisable.
#2 Eyes beyond the price
Look for the cryptoasset that is doing something different. What makes one stand out versus the other? Find an accurate reason of choice before you put your money into the crypto-world. This reason could be something that is not related to the changes in price levels. When you’re investing in a stock of a company you analyze the firm’s performance and potential holistically. Similarly, with cryptoassets, don’t just look at their recent price fluctuations. Keep your eyes on the underlying technology and future potential. For example, Ripple has declined somewhat since the start of 2018, yet, it shows strong potential with the advancement of technology revolving around its implementation. With the introduction of Script algorithm in its blockchain, Ripple has made transactions faster and less prone to hacker attacks. Hence, the chances of people adopting Ripple in the near future could be high.
Many cryptoassets have a pre-determined supply which depicts the maximum number of tokens or coins that could exist for that particular coin. For example, there could only be 21 million Bitcoins in total out of which only 20% are left to be mined. If the market interest in a particular coin remains high while the number is fixed, the prices could shoot up.
#4 Check the momentum
Significant data about all cryptoassets is easily available online. As always, research about investments before you finally commit. Gather information about the trades, ups and downs, price and traded volume of cryptoassets. The coin with increasing prices and trading volume is likely to gain momentum. The momentum might fluctuate as demand and supply for a particular cryptoasset might change but with enough research and discipline, you can decide when’s the best time to place a trade and when to get out of the crypto market to book your profits.
The crypto-industry is still in its nascent stage. Just like any other investment instrument research is your best friend. Continue looking out for the next Bitcoin, but at the same time invest and trade according to your financial goals! You can learn about various cryptoassets and their performance over the years on Unocoin’s Wiki. Stay updated with current news from the crypto world at Unoversity News.