Cryptocurrency is an excellent investment tool. It is able to grow in price in tens of thousands of times in just 1-2 years. By noticing a promising project at the ICO stage and investing in it in time, the investor has all chances to become a multimillionaire. But the price for such a crazy profitability is the terrible instability of the cryptocurrency market, moreover, such coins are not quite numerous. In this article we will learn how to secure your deposits and choose the most reliable assets for investment.
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The industry is still too young, and cryptocurrency assets are still very volatile. This is due to the fact that the total market capitalization amounts to about 280 billion dollars (at the time of writing), which is a very small, even ridiculous, figure on the world scale. If we compare it with other markets, for example, the capitalization of Japan’s stock market alone is about 3 trillion dollars, and this is only one country and not the largest one. Such a small capitalization makes the market very vulnerable to sudden ups and downs, which can be caused by some of its participants.
Currently, there is a huge number of different coins that perform different functions, have a different technological base, etc. So how do you choose the most reliable cryptocurrencies from all this mass? If you want to earn serious money in this field, you need to understand the industry. If you are a beginner and want to invest with minimal risks, then you will have to learn how to analyze coins. It is also worth noting that if your goal is reliability, then you should forget about the market of initial coin offering and consider only well-known projects. What you need to pay attention to includes:
– Capitalization. As it has already been mentioned above, this factor is one of the most important. The fact is that the probability of Bitcoin’s total collapse is much lower than that of Bytecoin. Much more resources are required to ramp or collapse the rate of a high-capitalization coin. The investment in Bitcoin will be more stable than investment in Bytecoin.
– Trading volume. It is impossible to see the general picture of what is happening based only on the first factor. Capitalization will show how much all the project’s tokens stand in total, but it must be understood that developers are free to issue coins in the amount they want to. The more their number is, the higher the overall coin capitalization will be. But the fact is that the key factor of the growth and development of any coin is its demand. Tokens may amount to several billion, capitalization can be pretty high, but they will be of no use to anyone. Thus, investing in such a project will not be logical. Understanding the volume of trading, the investor can draw conclusions about the demand and forecasts for the coin.
As we can see, since January the whole market has been going down with some interruptions for small growth and stagnation. Therefore, it is unfortunately not possible to talk about any serious earnings this year. If you want to invest in coins and earn on it, you need to follow certain rules:
- Make long-term investments. You do not need to count on a quick payback, you should “forget” about your contribution for at least 1-2 years.
- Learn to filter information and keep a close eye on the news background.
- Competently diversify the risks. Invest in top-10 or top-20 cryptocurrencies and rebalance the portfolio in time.
- Do not spend all of your money. You can not invest more than you are ready to lose. Otherwise, psychologically it will be difficult not to succumb to the emotional impulse during the drawdowns.
The cryptocurrency market is an excellent tool for earning money, but it is necessary to have a cold mind and clearly follow the chosen strategy to succeed in this field. If you are choosing a reliable cryptocurrency for investment in 2018, take a closer look at coins from top-10 or top-20. This approach will minimize your risks.
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