Many cryptocurrencies are forced to get lost because of their diversity. It is not difficult to understand each one when they can be counted on the fingers. However, when there are hundreds of them and most of them have no prospects or are in general a product of scammers it will take months of thoughtful analysis to figure out which one will succeed.
The notion of a confusing diversity truly corresponds to the current market situation. However, there are certain signs by which one can recognize in advance a cryptocurrency that has a chance in the future to significantly increase capitalization. A 100% guarantee, like everything on the crypto market, does not provide such an analysis, but the probability of increasing capital significantly increases.
What influences the market success of cryptocurrency
The selection of promising investment objects always begins with an analysis of the market and its needs. The reasons for the failure of cryptocurrency as a result of being reduced to one currency can not offer the consumer anything that he needs.
For example, Bitcoin forks had chances when nothing was needed an alternative. They had a slightly smaller chance later, when the emerging crypto-community hoped that they would be refined in the process of existence and eventually surpass bitcoin in workability.
Forks, that do not offer anything innovative initially, have no chance. The situation with altcoins is similar as they appeared as an alternative to bitcoin. They offered a number of new technologies to the consumer and now, if they don’t have innovations in their assets, they don’t have a chance of success.
Of course, manufacturability is not the only thing the market requires. We can distinguish three factors that affect the market success of cryptocurrency
The word “HYIP” fits perfectly, since HYIP (High Yield Investment Program) can be used in both of its meanings – an investment project with a high level of income, which turned out to be a bubble or a financial pyramid and hype around a popular phenomenon.
As a rule, cryptocurrencies that fall in the top just because of popularity, have no chance to stay there for a long time and then “exposed” in the media – alas, only after their collapse.
What is behind the rise of cryptocurrency from the top 10
If we consider the top 10 cryptocurrencies by capitalization, we can see that each of them corresponds to one of the listed items or several at once. This leads to the next step on the way to choosing a promising investment object.
It is necessary to analyze why the top (at the time of readiness to invest) currencies have been successful. It will save the investor from investing money in the top, but unpromising currency, the aforementioned HYIP.
Everything is usually clear in the first case. Even if a person is not particularly familiar with blockchain technology you can find a specific description of the essence of innovation in an accessible language on forums like Bitcointalk, on sites like CryptoWiki, in reviews, etc. As an example of a “technological” currency, Ethereum, which offered smart contracts, can be. Of the later top currency, Monero has an obvious technological base, in which the technology of ring signatures is introduced, which increases the anonymity of transactions, and Ripple, which offers a good transaction speed and a curious DDoS protection scheme.
Convenience and practicality too easy to assess. The best example is Bitcoin, which can be used as a classic payment tool even without an exchange. Moreover, it is not difficult to exchange it for anything, including undistributed national currencies. Ethereum, Lightcoin, Bitcoin Cash are a bit behind, but it is obvious that it is also easy to exchange them for fiat money.
The situation is more difficult in the third case. First of all, to look and be really reliable and promising currency are two different things. Secondly, reliability and availability, unlike a specific technology and a specific opportunity to use the currency for its intended purpose, are vague concepts. It is often difficult to understand what lies behind the “top-level” of a currency – a high and reasonable level of trust or hype.
Only the top currencies of the “old men” – Bitcoin, Ethereum, partly Lightcoin, Bitcoin Cash – can boast of a really high level of trust. All the others lasted too short to conquer it. However, talking about the hype in relation to other is incorrect. It remains to investigate the reasons that could lead the consumer to the idea of the reliability of the currency.
For example, according to rumors, authorities can lift restrictions on ICOs in China that will be conducted using NEO. Is it a reason to increase the level of confidence in this cryptocurrency? Will China allow NEO or is it unclear intentions or even a “duck”? Who knows.
For example Dash. A part of the crypto-community explains its getting into the top 10 with a quality software upgrade and the second part claims that such a course increase is too significant for software updates and that all this looks like Pump and Dump scheme well known to traders.
It is possible to understand whether this is a HYIP or not a HYIP, if you deeply investigate speculation and rumors. Check where the legs of the news about NEO are growing from and whether the Dash software update is really capable of providing the user with something new and useful.
In the end, it all comes down to the same whether the currency has become more convenient, practical, reliable, whether it has given something new technologically. Simply, if in the first two cases the answer often lies on the surface, then in the third one there will be a lot of sources of information to be examined in order to arrive at a reasonable conclusion.
Should I invest in top cryptocurrencies
One of the proven cryptocurrency earnings strategies suggests that investors (especially beginners) try to invest only in the currencies from the top 10, focusing on the fact that they have the greatest chances of increasing capitalization and these cryptocurrencies are most stable if viewed together.
Bitcoin and Ethereum will most likely be able to move only the currencies from the first places in the long run, which will offer a fundamentally different technology that surpasses everything that was before. The probability of this is, because it happened and happens everywhere at first there was an Edison bulb and then a computer appeared. However, it takes time.
Bitcoin and Ethereum can leave the first places only in the case of a grand collapse in the short term, the probability of which, given their current prevalence, is rather low. Capitalization is also growing, so investment in them looks justified.
We can talk about the relative stability (and, as a result, the increase in capital) of time-tested currencies such as Lightcoin or Bitcoin Cash in the short term. It is impossible to declare this with certainty in the long term, since their technological base is not the most reliable and convenient and, if something more technological appears on the market, they can lose ground.
Newbies are unstable, but they have a chance to increase capitalization if they give the consumer something new. They can do this at any time. They will hit the top 100, then the top 30, and so on before they reach the top 10.
Moreover, now in the “thirty” there are currencies, whose presence in the “top ten” at first glance would be understandable. For example, ZСash, which also offers increased confidentiality, or Ethereum Classic, which produces quite a decent impression. Whose popularity is more justified – Dash and NEO or Waves, on the platform of which a huge amount of ICO is held?
Of course, you shouldn’t stop exclusively on the top 10, as it constantly changes due to the currencies from the extended tops and if you limit yourself when choosing an investment object you can miss the perspective currency.
To be fair, if you invest in everything, then it is more logical to choose currencies from the top 10. The probability of making a profit is higher in this case than the probability of getting it by investing in a dozen random currencies from the top 100.
Which cryptocurrency is worth investing
However, if a cryptocurrency meets the three mentioned criteria – high technology, practicality and reliability, then the rate of growth is enormous, if two – great, if one – essential to consider it as an object for investment, but additional research is required.
The larger the capitalization, the more difficult it is to collapse the currency in the market. Provided that capital is distributed among a large group of people and not concentrated in the hands of a couple of people.
Cryptocurrency should be traded on the market. The turnover of the currency in the top 100 is mostly several tens or hundreds of thousands of dollars, occasionally the bill goes to millions, rarely to thousands. It makes no sense to invest in a currency, the daily turnover of which is $ 100 and which at the same time did not arise just that.
If the cryptocurrency has appeared recently and has already hit the top 100, you need to analyze what caused the takeoff. 90% that this is a scam. However, it is likely that it is based on innovation, which the developers failed to properly market, but which was immediately noticed by knowledgeable people. This is the case when you can “catch” a promising currency at the dawn of its popularity. However, it is a very rare case. It is important to look more often at the time of existence of a currency for another reason. The longer it exists, the more theoretically it is.
Suspicious are cryptocurrencies the course of which several times rose and collapsed. If one collapse can be explained by chance, then two collapses say that a third may happen, and three or more – that it is not necessary to invest big money. The sharp appreciation immediately after the appearance of the currency, and then the fall, too, most often indicate that the developers did not take into account what was important. However, no less suspicious is the sharp rise in the course without landslides. Again, if the reasons are not obvious 90% that it is raised artificially.
The most reliable are currencies, the rate of which is slowly but surely growing over a long period. There are, as a rule, grounds for growth, lacking only confidence in the currency. As soon as it transcends a certain line of trust and popularity, the course is likely to start growing faster or at least not reduce the existing speed.
Do not forget about popularity of course. HYIP is what should alarm the investor. However, if specific advantages of the currency are discussed or at least there is a debate on whether a certain innovation is a plus or a minus, you should take a closer look at the cryptocurrency.