Over the years, cryptocurrency has been a financial groundbreaker, providing numerous investment opportunities for those willing to tap into the digital space. Since the initial launch of Bitcoin, the first cryptocurrency, in 2009, several smart contracts have been deployed, leading to the emergence of over 20,000 cryptocurrencies in today’s market.
While some cryptocurrencies solve real-life problems, many are solely built on hype, exposing more investors to perplexing situations. This makes market understanding significant to avoid unbearable losses.
In this article, we’ll explore cryptocurrency evaluation methods.
The 5 Best Cryptocurrencies to Buy Right Now
Although there are a few high-potential crypto assets in the market right now, only the investors who understand the market can discover these hidden gems. To succeed in a volatile market like cryptocurrency, you need to build a portfolio of both promising and low-risk assets. Here are the 5 top cryptocurrencies to invest in now:
Bitcoin (BTC)
The digital form of money has grown beyond its primary exchange value. Over the years, Bitcoin has adopted several innovations to scale its ecosystem. Since its recent embrace of Non-Fungible Tokens (NFTs) through inscriptions, Bitcoin has displayed huge potential as a digital value.
Ethereum (ETH)
The Ethereum blockchain has grown, following its support for Web3 scaling solutions like Non-Fungible Tokens (NFTs), Decentralised Autonomous Organisations (DAOs), the metaverse, and Decentralised Applications (Dapps).
The flexibility of Ethereum in emerging markets is why investors consider it the future of digital finance. With more innovations ahead, ETH may become one of the most lucrative investments in the realm of finance.
MATIC
The previous Matic network, Polygon, is one of the most innovative blockchains at the moment. Polygon provides open-source opportunities for developers to build scalable solutions. As a result, its native token, Matic, may become one of the most valuable cryptocurrencies in the future, making the top list of every crypto investor.
Binance Coin (BNB)
BNB, the native cryptocurrency of the leading exchange, Binance, is attracting the interest of many investors today due to its wide range of opportunities. From the scalability of the Binance Smart Chain to BNB historical data, the coin has a positive outlook for both short-term and long-term investments.
USDT
While cryptocurrency assets are volatile, stablecoins like USDT have allowed investors to maintain price stability in recent times. Its real-life use-case as a store of value makes it a top-tier investment for investors looking to consider less risky opportunities.
A Closer Look at The Top Crypto Investments
Every successful cryptocurrency project emerged due to several factors. Now, let’s take a closer look at some of them.
BITCOIN
The Bitcoin currency is the first cryptocurrency to ever exist on the blockchain. It was first invented in October 2008, and later launched in January 2009 by an anonymous, called Satoshi Nakamoto. Since then, it has continued to act as a frontier for other cryptocurrencies and altcoins.
How Does Bitcoin Work?
When a user transfers BTC from their wallet address to another person’s address, the transaction is stored on the Bitcoin network and later assembled into blocks, which will be included on the blockchain when every block is mined.
What Are Bitcoin Block Rewards?
The Bitcoin network operates a proof-of-work (PoW) consensus mechanism. In such a mechanism, the network rewards miners to contribute to its computational power. The stronger a computer is, the more likely that it will earn a block reward, which is the incentive that the Bitcoin network pays to miners.
What is Bitcoin Halving?
Bitcoin halving is when a block reward is a reduction in the Bitcoin block reward. The halving occurs every four years after 210,000 blocks are reached and reduces the block reward by half.
Why is There a Total Supply of Bitcoin?
Bitcoin has a total supply of 21 million due to the long-term effect of the halving. Since Bitcoin can only be divided into 100 million units of Satoshi, someday, the block reward will be smaller than a unit of Bitcoin. During this time, there will no longer be new Bitcoin in circulation, and miners will solely earn from transaction fees.
Bitcoin Price History
According to Statista, Bitcoin skyrocketed to its All-Time-High of $65,000 in 2021 following the launch of a Bitcoin ETF, BITO, in the United States. Other factors include the IPO launch of Coinbase and Tesla’s announcement of purchasing $1.5 billion worth of BTC. However, the cryptocurrency plummeted after a crypto exchange and hedge fund, FTX, filed for bankruptcy in July 2023.
Recently, BTC has continued to experience a price hike due to a combination of factors. On 5 April 2023, Bitcoin grew by 25% due to the adoption of Ordinals and the US banking crisis. On May 1, 2023, Bitcoin’s price surged 47% since June 2022, before the financial company Celsius went bankrupt. On June 1, 2023, Bitcoin volume increased after it declared network support for BRC20 tokens.
ETHEREUM
In 2013, a developer named Vitalik Buterin proposed the initial idea of Nick Szabo on smart contracts, which later led to the creation of the Ethereum network.
How Does Ethereum Work?
Ethereum records transactions on the Ethereum database network, which is distributed among several computers (nodes).
Unlike the Bitcoin network, the Ethereum network allows developers to deploy smart contracts and create decentralized applications (dApps) through open source.
What Are Smart Contracts?
Smart contracts are self-executing contracts executed by computer programmes that remove the need for an intermediary during a transaction. These contracts store transactions on a public ledger, which makes them traceable and irreversible.
What is The Ethereum Consensus Mechanism?
Ethereum operated a proof-of-work (PoW) consensus mechanism until September 2022, after the merger. Since then, it has continued to operate on proof-of-stake (PoS), a protocol that helps the network maintain higher security and lower transaction fees. In a PoW, node validators stake capital in the form of ETH into a smart contract.
Ethereum Price History
According to Statista, Ethereum’s price surged in 2021 after an NFT sold for 38,000 ETH, which was equivalent to $69 million at the time. In 2022, the price declined along with BTC after the cryptocurrency exchange, FTX, collapsed.
2023 is an interesting year for Ethereum. In April 2023, the successful launch of Ethereum’s Shangai Upgrade increased the price of ETH to $2100 before the price reacted to volatility.
How to Pick the Best Crypto to Buy Now
Deciding which cryptocurrency to invest in can be challenging when there are many scam tokens in the market. Considering the potential damage of hype-built cryptocurrencies, you want to ensure that you get substantial value for your time and money. Here are 5 key ways to choose the right crypto:
Evaluate the project’s website
A website is the research bedrock of every cryptocurrency. Apart from giving you a grasp of its future expectations, it’s your walkthrough to a sound investment judgement. While a website is mandatory for every crypto project, some criteria require your attention to invest in worthy assets.
Firstly, the language usage on a website can inform you about the end goal of your potential investment. So, you want to examine the spelling, punctuation, and other linguistic elements to prevent falling victim to scammers.
While navigating through the website, perform a quick user experience test. Even though crypto websites vary due to their respective protocols, a reputable project must have both straightforward content and a standard interface. Also, ensure that it’s recently updated so you don’t entrust your money to a team that’s unwilling to put in the work.
More so, founders are the spearheads of every cryptocurrency project. So, you want to ensure that their real identities are included rather than an anonymous profile. Aside from this, look out for the partner’s page so you can use their strategic partnerships to gain insights into their core values.
Additionally, thoroughly evaluate the whitepaper page for a comprehensive project understanding. A whitepaper is a document that outlines the plans of every cryptocurrency project and should spell out the token goals and objectives.
Evaluate The Social Media Channels
Community is a core part of every successful cryptocurrency project. As a result, founders employ certain marketing tactics to increase their product’s reach. Although projects use several social media platforms to improve their token awareness, most cryptocurrencies invest their marketing efforts in Twitter, Discord, Telegram, and Reddit.
On their Twitter Channel, scrutinize the account’s longevity, followers, content engagement, and influencer partnerships. If the page was recently created, you want to make sure it doesn’t have an outrageous number of followers within a short time. Otherwise, the project is likely to invest in bot followers, which in some way signals desperation. At the same time, low engagements on big accounts can showcase illegitimate promotion.
More so, join their Twitter spaces and be attentive to how they handle constructive criticism. If they avoid major questions or are unable to make necessary corrections, then there’s an underlying problem.
Additionally, evaluate their influencer partnerships. The kind of influencers promoting the coin is a reflection of their values. So if their reputation is jeopardised, consider it a red flag. You can also scrutinize their content to discover whether or not they are value-driven. If they post mostly giveaway content to expand their reach, then you may want to take some steps backwards.
While Twitter is the centre of promotion, Discord and Telegram are the homes of every project. The social media channels provide an avenue for founders to build a community around their projects. So, you want to ensure that the community is organic and value-oriented. If a channel is flooded with bot followers or pump-and-dump members, then it’s a red flag. Also, pay attention to how the moderators respond to complaints and suggestions. If they are reluctant to help the members, such an investment is tricky.
Study The Price History
The price movement of a coin can provide you with insights into whether or not it is a safe investment. Although cryptocurrencies are volatile assets, this metric can help you decide on what crypto to invest in.
Websites like Coingecko and Coinmarketcap are fundamental tools where you can track the price of your potential cryptocurrency. If the coin is launched, you can use these websites to check the historical data.
Look out for a gradual increase in the price, and if there’s an outrageous movement, it’s a sign of a pump-and-dump project or a rug pull. Scammers pump and dump these cryptocurrencies to make profits off their followers and community. They create hype around such projects through promotions to bait their followers into investing in them for liquidity exit.
Track the price history across different spans, from yearly to hourly movement, and pay close attention to whether there’s anything unusual. Also, check the “All Time High” and the “All Time Low” to gain insight into the coin’s future. Combining these metrics can give you insights into the highest and lowest prices that your potential investment can get, so you can evaluate whether or not it’s worth your money.
Check The Trading Volume
Every successful cryptocurrency should be a liquid asset. Liquidity determines how urgently you can exchange your coin in the market. When buying or selling a cryptocurrency, you’re operating as a liquidity provider to drive the coin’s volume.
The trading volume is a technical indicator that provides insight on your potential investment. Investors use this metric to determine a potential upward trend or a reversal. If the volume is high, that can signal that investors are constantly trading it, while a low volume indicates a coin that lacks the faith of other investors.
A trading volume can also help you validate the market’s strength. The metric serves as a yardstick to discover a cryptocurrency’s demand. If there’s a change in the asset price in relation to the trading volume, it can help you determine whether the current trend is strong or weak. The asset price and trading volume correlate to showcase the investor’s interest and strike a balance between market demand and supply.
Finally, low liquidity in the market can influence the token’s authenticity. Oftentimes, when investors are unable to sell off their low-priced assets, it creates a pump-and-dump situation for liquidity exit.
Determine The Coin’s Utility
Cryptocurrencies showcase their potential through their use cases. A promising cryptocurrency should serve a purpose and offer a solution to real-world problems. Although not all cryptocurrencies solve a practical problem, major coins provide usefulness to the blockchain. A prominent example is Bitcoin, which has become a digital high-value asset today. Bitcoin allows people to exchange products and services using a decentralized mode of payment. Other notable examples are Ethereum and Polygon, which help developers deploy smart contracts for innovative products.
However, some tokens are solely built on hype or exist as mere jokes. These types of tokens are regarded as meme coins, and instead of being value-focused, they’re heavily dependent on social media noise. Meme coins use community raiders and influencers to push the token and drive the price higher. Although you can make a decent profit from these kinds of tokens, they are high-risk investments with little or no potential in the future. So, only invest in what you’re willing to lose.
Finally, the utility of a coin can influence its potential price. Whether or not a token has utility can determine its market demand in the future. Since every successful cryptocurrency convinces investors to hold onto the asset, you want to ensure that you put your money in an asset with a potential demand.
FAQs
I’ve answered some of the most popular questions below:
What is The Best Cheap Crypto to Buy Now?
Pay attention to market capitalization, which is the multiplication of the current price and the circulating supply. The higher the market cap ranking, the lower the risk of your potential investment.
Additionally, use cryptocurrency tools like DefiLiama to conduct in-depth research on the price movement while considering important factors like the whitepaper, utility, and other evaluation methods shared in this article.
What is The Next Crypto to Hit $1?
There are some promising tokens out there below $1. However, such tokens require in-depth cryptocurrency research. Therefore, you may have to combine both fundamental and technical analysis to draw your conclusion.
Conclusion
Knowing the best crypto to buy may seem challenging, but it’s not. You’re most likely experiencing difficulties due to several available cryptocurrencies and market speculation. While there are many tokens with no real-life value, assets like Bitcoin, Ethereum, Matic, Binance Coin, and USDT provide usefulness in the cryptocurrency ecosystem. Regardless, it’s important to conduct due diligence before buying any coin and invest only what you’re willing to lose.
If you learned something from this post, you may as well check out some of our other interesting articles.
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