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Those that had bet on Bitcoin back when it was priced at mere dollars have made significant profits over the past years. The world’s largest cryptocurrency by market capitalization has been the best performing asset of the past decade, and as a result, several novice investors who timed it right and held onto their satoshis ended up as millionaires and in many cases billionaires.

As the cryptocurrency market continues to expand and the adoption rate is at an all-time high, investors are looking for the next big cryptocurrency that will push their portfolios over the metaphorical ‘Moon’. The only issue that remains, how can we spot a cryptocurrency which will take off in the future?

The Basics

The Buy-in price is Critical

When looking for the next big thing, keep the token cost in mind. Low-priced cryptocurrencies may be the ideal investment for the ordinary bitcoin investor with little capital.

A $5,000 investment would only buy a small portion of Bitcoin or thousands of coins worth less than a dollar apiece at today’s pricing. It’s important to keep in mind that low-cost coins provide an excellent means of portfolio diversification.

Adoption Possibilities

In the final quarter of 2017, ripple saw significant growth. Though XRP has taken a hit this year, it still has a lot of promise for use outside of the speculative cryptocurrency market. The underlying technology of ripple’s settlement system assures both central banks and other financial institutions that this will materialize.

The same can be said about Polygon. The Indian project is seeing a plethora of adoption across the cryptocurrency industry. Polygon is employing a new sidechain approach to overcome some of Ethereum’s key shortcomings, including its throughput, poor user experience (speed and delayed transactions), and lack of community control. As such, it is receiving a lot of hype since its competitors are few.

Finding a cryptocurrency that has an advantage over the competition (and is thus more likely to be widely accepted) might turn out to be a wise investment.

A factor to consider is supply.

The maximum supply of most cryptocurrencies is predetermined. There will be no more tokens created after the cap has been met, which is usually by the use of mining.

It is possible that the price will go up if demand remains stable, but supply is constrained.  Before you buy in any cryptocurrency, make sure to evaluate the entire supply as well as the current circulation.

The price and the volume

Online resources for cryptocurrency trading information are readily available. In the future, digital currencies with rising prices and transaction volumes will have more appeal.

While there is no assurance that an upward trend will continue, it is a good indicator of digital currencies attracting the most investor attention.

Doing Your Own Research (DYOR)

Considering all of this, you may want to consider investing in cryptocurrency. If this is the case, you should diversify your token portfolio rather than putting all of your money into a single project. To ensure that your portfolio is well-balanced, how should you go about selecting your tokens? Here are some important things to keep in mind:

Token Popularity

Whether you’re new to crypto or not, you’ve undoubtedly heard of some of the most well-known tokens, such as bitcoin and ether. These are the most financially successful coins and may be found in nearly any crypto investor’s portfolio. These tokens are generally popular because they are typically older, more reliable tokens that are a “safer” investment.

These should, without question, be part of your portfolio, but they should not be the only ones. While a bitcoin or ether bull run may make worldwide headlines, there are a plethora of lesser-known altcoins that outperform the market. Visit crypto-related forums to find some potential lesser-known coins to diversify your portfolio and hedge your bets in either way.

Tokens with a Potential Underlying Use Case

Cryptocurrencies with a potential underlying use case are a class of tokens you should consider adding to your portfolio. Some cryptocurrencies, for example, are tied to blockchain-based initiatives that are projected to gain traction over time, suggesting that their value would likely rise with time. Although not every project will succeed, purchasing a few tokens based on the promise of their parent projects is a nice decision.

Crypto-related periodicals and blogs are typically useful places to find out about new or potential blockchain ventures.

Past Market Performance

Before buying any cryptocurrency, it is essential to examine its preceding market performance. This is because this data demonstrates its capacity to appreciate in value over time. Some tokens, such as bitcoin, have been discovered to have market highs and lows, and as a result, will almost certainly recover from current market losses. If the history of a token reveals that it peaked shortly after launch and has subsequently dropped dramatically, it’s most likely a pump-and-dump operation to avoid.

While it is not a hard and fast rule, a coin’s past market history should be examined before buying in it.

Community Verdict

While you as an individual may be limited in your understanding of cryptos to invest in, the community is not. On the contrary, the internet is replete with information on crypto investment, which you should definitely make use of.

Go to cryptocurrency forums, Telegram groups, and social media profiles to see what tokens are being discussed. If you’re thinking about investing in a certain currency, you may ask the community for advice, and you’ll nearly always get a response. In any case, cryptocurrency is all about community, so take advantage of it.

However, just like your cryptocurrencies, verifying where you are collecting your information from is a wise decision. Renowned influencers and traders are a great place to start, but keep in mind no one person can be right all the time.

Conclusion

Creating an investment portfolio is never simple, especially when it involves something as complex as cryptocurrencies. There are, thankfully, strategies for navigating this and picking the best tokens. When choosing cryptos to invest in, keep all of these factors in mind, from reputation to success in recent years.

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.