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How to find the next Big Cryptocurrency?

Cryptocurrency made easy

By MarcusPublished 2 years ago Updated 2 years ago 4 min read
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Photo by authour using Canva

Cryptocurrency has become mainstream in the past number of years. Maybe your friends are talking about it, or the news, social media etc. Either way, you want to understand the basics of this before jumping in. Most of us would love being cryptocurrency millionaires, having invested in cryptocurrency back in the day and having its value skyrocket to the moon.

The fortunate few that did are Sam Bankman-Fied, Tyler and Cameron Winklevoss, Barry Silbert, Brian Armstrong, Michael Saylor that held on to cryptocurrency or invested in it when it had little to no value and then became cryptocurrency millionaires when the value skyrocketed. Glauber Contessoto became a Dogecoin millionaire with a $250,000 investment and became a millionaire on paper on April 15, 2021. In Dec 2021, with dogecoin trading around 17 cents, he continues to buy the dip.

What is this cryptocurrency?

Cryptocurrency is basically:

  1. A digital (virtual) currency.
  2. Securely by cryptography to secure transactions and prevent counterfeit or double count.
  3. Decentralised networks based on blockchain technology. A blockchain is a ledger that keeps track of cryptocurrency transactions. This ledger of transactions is maintained across computers that are linked across a distributed network.
  4. Decentralised and not maintained by a central party be that a person, company, central bank or government to manage the system.

How to find the next big cryptocurrency?

The 3 core areas that you want to focus on to find your next big cryptocurrency that could potentially go up in value is:

Core areas

  1. Price
  2. Prospects
  3. Supply & demand

Additional supplementary areas that you will want to consider are:

Supplemental areas

  1. Developer activity
  2. Community activity
  3. Price history

1. Price

Cryptocurrency is highly volatile, and it is not regulated by a central authority. This is due to speculation, hype, pump and dump schemes.

Generally, the cheaper coins with lower market caps are more susceptible to pump and dump schemes.

A larger, more well-known cryptocurrency with a larger market cap isn’t immune to this but to a certain degree is less susceptible to the pump and dump schemes of cheaper coins. Investors that are aware of this can be more informed before investing in a cryptocurrency.

Below is the Bitcoin price at the year-end of 2021:

Image source: CoinDesk

Below is the Dogecoin price at the year-end of 2021:

Image source: CoinDesk

2. Prospects

Before investing in any cryptocurrency, look at it like any other business or startup. Good businesses solve big problems and fill needs. The same goes for crypto startups. Are they solving a problem?

Focus on prospects with real value and stay away from questionable projects with shady founders. Eg squid coins.

Below are some examples of the functions of existing cryptocurrencies:

  • Ethereum is a technology that uses blockchain development to replace internet third parties that store data and financial records.
  • Litecoin has a faster block generation rate and hence offers a faster transaction confirmation time.
  • Cardona provides solutions for chain interoperability, voter fraud, and legal contract tracing, among other things.

3. Supply and demand

Supply is the maximum amount of coins that can be mined or entered into the market. You always want to consider the supply and the circulating supply which represents the current amount of coins in the market.

Some cryptocurrency has a maximum supply while others are infinite meaning that they have an infinite supply.

Lower supply means higher demand.

Supplemental areas

1. Developer activity

Strong projects have high developer activity, some less. If the activity is low or down trending, that is cause for concern. The easiest way to measure this is by viewing the project on GitHub.

The work done on GitHub is public, and so are the activity metrics. The number of updates it has received, how many watchers there are, how many forks have been created and the total stars are great metrics to gauge the project’s activity.

2. Community activity

A project with a strong community is just as important as high developer activity. The larger and more involved the community is, the more valuable the coin should be.

You can check out the

  • Twitter page
  • Reddit
  • Blogs/ Forums
Image: Bitcoin Twitter page

3. Price history

You can find up-to-date information about cryptocurrency trading is easily available online, your cryptocurrency exchange or reliable source such as CoinDesk. Those digital currencies with increasing prices and volume of trades are likely to be those that have momentum going forward. It is important to note that there is no guarantee that this momentum will maintain, but it is nonetheless a useful way of benchmarking which digital currencies have the most investor interest and traction for the time being.

A coin’s price may also correlate to other coin prices, stock market moves or world events. For example, when Bitcoin’s price increases rapidly, most altcoins drop in price. This is due to the fact that Bitcoin is the primary coin used to trade other altcoins. An increase in the buying of Bitcoin leads to an increase in the selling of altcoins. This drives Bitcoin’s price upwards and altcoins down.

Conclusion

Lastly, there is no telling which cryptocurrency will skyrocket in value with certainty before it happens, but having a benchmark is a good guide to help you determine the, most promising cryptocurrency to potentially invest in.

Finally, only invest in amounts you feel comfortable with and never more than you can afford because cryptocurrency is a volatile market and there is risk involved in it as with any investment.

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About the Creator

Marcus

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