Cryptocurrency is a popular investment option in 2023. Many investors are trying to make profits through crypto trading. More than 90,000 altcoins are currently available in the crypto market, making it confusing for traders to choose the right one. Various types of crypto tokens are available such as payment tokens, metaverse tokens, smart contract platform tokens, gaming tokens, etc. Therefore, you must do good research to find out the best crypto tokens.
You have to check many features while researching a cryptocurrency. Here are some of the most important factors you must not ignore in your research.
- Study The Market
Studying the basics is the most important step in finding a cryptocurrency for trading. Before investing, learn about the project, its founder, team, use cases, token economics, as well as the underlying technology. You must also consider your goals while investing. For example, if you focus on short-term gains, look for penny cryptocurrencies. For long-term investments, you have to find cryptocurrencies with strong basics, a strong development team, and vivid use cases.
- Market Capitalization
Market capitalization is one of the easiest techniques in selecting a crypto coin. Market capitalization can be calculated by multiplying the current price of the crypto token in the market by the total tokens currently in circulation. Coins can be micro, small, medium, or large-cap depending upon their capitalization. When the market cap is high, the volatility will be low over time. A higher market cap also ensures high liquidity, which makes it easy for a trader to enter and exit different trading positions as they wish. When you choose a crypto coin with a low cap, the risk-reward ratio will be higher. You can not consider cryptocurrencies to be a safe investment option. However, you may choose one among the top 10 crypto coins, which ensures that you invest in a reputable project with a solid team.
- Max Supply
The value of fiat currencies depends on the total amount of money currently in existence or the total supply. When the supply and money are more, the value will be low. Crypto tokens are released according to the release schedule. Thus, there will be a maximum token supply and a total supply. The total supply of crypto coins is the total number of coins in circulation currently, while the max supply can be considered as the total tokens that would be released in the whole lifetime of that particular crypto coin. Therefore, try to choose coins with less gap between these two.
White Papers are technical documents that explain the new technology and its concept in detail. For a crypto coin, a whitepaper is considered to be a combination of technical whitepaper and business plan in a single document. It helps investors to learn more about the project, its vision, team, goals, blockchain technology uses, and the token economy. Crypto whitepapers are regulated. They are issued by the project themselves and are non-certified. Therefore, you have to be very careful while confirming the authenticity of the whitepaper of a coin.