Cryptocurrencies had a very rough year in 2018. Many investors took into account the performance of cryptocurrencies in 2017 before making an investment decision. However, most of the cryptocurrency lost over 70% value in 2018. That is why; most of the investors are in the red.
When you look at cryptocurrencies as an asset class, you will realize that it is centrally gaining more and more attention. However, it is essential to choose the cryptocurrency carefully. Many investors are trying to find the next big cryptocurrency. They are expecting exponential returns in cryptocurrencies. It is not easy to find upcoming cryptocurrency. The next cryptocurrency to buy might turn out to be a dud. We will today list the options which you can look at when it comes to the next big cryptocurrency.
1. Bitcoin (BTC):
In the year 2018, Bitcoin (BTC) went from around $ 20,000-$ 3600. That indicates that it lost more than 80% of its value. That, however, opens up new opportunities for investment. If you’re looking to find the next big cryptocurrency, it is essential to first look at the dominant and the mainstream cryptocurrency. You should think about investing in Bitcoin (BTC).
The domination of Bitcoin (BTC) is still over 50%. It indicates that Bitcoin (BTC) still has a significant amount of traction. At the same point in time, when you look at the lows, the lows of Bitcoin (BTC) has been around $ 3200. It bounced back from those levels significantly. At the prize of $ 3600, you should look at it from a long-term point of view. However, it is essential to diversify your investment to reduce the risk profile.
You need to keep in mind that while 100 fold returns might not happen again. That is why it is essential for you to have realistic expectations about the returns of Bitcoin (BTC). Over expectations always leads to disappointment.
Newer investment avenues:
These days, Bitcoin (BTC) related instruments are also available to invest in Bitcoin (BTC). Soon enough, Bitcoin ETFs will also see the light of the day. It will become easier for mainstream investors to invest in cryptocurrencies with the help of ETFs. One thing which you cannot take away from Bitcoin (BTC) is that it is the pioneer cryptocurrency. It still has that status, and nothing can take away this status from it.
2. Ethereum (ETH):
Ethereum (ETH) has suffered a similar fate as Bitcoin (BTC). Ethereum (ETH) has fallen all the way from $ 1200-$ 125. It has lost approximately 90% of its value. That is why; the will need a significant amount of recovery. At the same point in time, if you’re expecting that it will reach $ 1200 pretty soon, you are wrong. It might just outperform the other asset classes.
The year 2017 was pretty significant for Ethereum (ETH). In the year 2017, it rose by 3000%. It became the 2nd most valued cryptocurrency. However, since then, it is consistently losing value. Many investors are asking now whether at these depressed prices, should I invest in Ethereum (ETH)? You need to keep in mind that in spite of falling by 90%, there is a risk that it might drop even more. That is why; you have to be pretty careful when thinking about investing in Ethereum (ETH).
Fundamentals of Ethereum (ETH):
Before you think about investing in Ethereum (ETH), it is crucial for you to understand the fundamentals of Ethereum (ETH).
• Ethereum (ETH) blockchain is used for developing decentralized applications. The developers can quickly develop decentralized applications and achieve a significant amount of scale.
• Ethereum (ETH) also offers smart contracts. The Ethereum (ETH) blockchain facilitates efficient execution of smart contracts.
• Ethereum (ETH) blockchain also offers token issuance. Many companies are using the Ethereum (ETH) blockchain to launch an ICO.
These are the three fundamentals which are propelling Ethereum (ETH) forward. There are some drawbacks which you need to keep in mind.
Drawbacks of Ethereum (ETH):
Some of the cons include:
• The ICO market is down in the doldrums. The number of new ICOs is consistently decreasing. That is why that aspect of the Ethereum (ETH) blockchain is suffering.
• Ethereum (ETH) is not as scalable as it seems. There are problems when transactions have increased.
That is why; Ethereum (ETH) will not gain smoothly. There will be a lot of volatility as well. You have to keep that in mind before investing in Ethereum.
While Ethereum (ETH), might emerge as the next cryptocurrency but it is important to remain cautious. There are a few hindrances as well. If these hindrances overpower the fundamentals, the performance might be lackluster. It is important to buy at the right price and hold for a long time if you want to make any money.
3. Ripple (XRP):
Ripple (XRP) is the second most of valued cryptocurrency currently. It is different as compared to the other cryptocurrencies. It is solving a real-world problem. It facilitates cross-border transactions. The transactions are concluded quickly. That is why; it is gaining a lot of traction.
Ripple (XRP) has fallen from $ 3.52 to around $ .36. Due to that, it also has lost close to 90%.
Fundamentals of Ripple (XRP):
Some of the aspects of Ripple which you need to keep in mind are:
• Ripple (XRP) is developing a lot of different products based on that RippleNet. Each of these products serves a different purpose.
• Ripple (XRP) has developed products like xCurrent, xRapid, xVia. Each of these products facilitates cross-border transactions.
• Ripple (XRP) facilitates real-time settlement of transactions. The transaction anywhere around the world can get settled within a few seconds. As a result, sending money from one part of the world to another has become very easy.
• Ripple (XRP) has opened newer and newer companies to use its RippleNet products. Fortune 500 companies are already using RippleNet products to settle their dues.
• RippleNet products are so useful that even when you send just to $ 1000 through RippleNet products, the fees will be less than $ 1. As a result, they are highly cost-effective.
When you look at all of these fundamental points of RippleNet products, you will realize that it is a cryptocurrency which you should consider.
Shortcomings of Ripple (XRP):
There are a couple of flaws of Ripple which you need to keep in mind before making an investment decision. These include:
• Ripple (XRP) does not make it mandatory to use the XRP token. That is why the use of XRP token is not increasing at the same pace as RippleNet products. As a result, XRP token is not appreciating by the same amount.
• RippleNet products are not decentralized. That is why RippleNet products are considered as security. There are even a couple of court cases pending, about the same.
You have to look at the drawbacks as well as fundamentals of Ripple (XRP) before making a decision.
If the ripple (XRP) continues to progress at the same pace, the use of XRP token will increase as well. Eventually, it might increase in value. It is vital for you to keep Ripple (XRP) on your radar as it might be the next big cryptocurrency.
4. Binance coin (BNB):
You might not have heard a lot about Binance coin (BNB). However, it has outperformed this year. It gave positive returns even in the year 2018. It indicates that something is different about this cryptocurrency which might make it the next big cryptocurrency. Let us now look into the fundamentals of Binance coin (BNB).
Fundamentals of Binance coin (BNB):
Some of the things which you should know about Binance coin (BNB) include:
• The Binance cryptocurrency exchange launched Binance coin (BNB).
• The fate of this cryptocurrency is directly proportional to Binance cryptocurrency exchange.
• Binance cryptocurrency exchange is one of the largest exchanges globally. That is why, as the volumes on Binance cryptocurrency exchange increase, the value of Binance coin (BNB) will also increase. That is why; it is a bit different as compared to the other cryptocurrencies which are not backed by a reliable asset.
• Binance coin has a market cap of just $ 844 million. That is why, if you’re thinking about the exponential returns, there is plenty of space. However, it will not happen anytime soon. Besides, you need to follow the fate of the cryptocurrency exchange to know more about it.
• Tracking the fundamentals of the cryptocurrency exchange is easy. The cryptocurrency exchange routinely publishes press releases regarding the recent developments in the cryptocurrency world and its exchange. Therefore, it becomes easy for you to know more about the fundamentals of this cryptocurrency.
Drawbacks of Binance coin (BNB):
There are a few drawbacks of the cryptocurrency as well which you need to keep in mind. These are:
• The competition in the cryptocurrency space is increasing at a rapid pace. That is why; the volumes in the cryptocurrency exchange might not grow at the same speed. It will impact directly on the fate of the coin. That is why you need to have the right patience and have to keep track of the cryptocurrency exchange to know more.
• As we mentioned above, in the last year, Binance coin (BNB) has outperformed. That is why in the coming year it might underperform. If you’re okay with stagnation and holding it for a long time, that is only when you should think about this cryptocurrency.
When looking for out of the box idea on this list, this one is it. However, do make sure that you conduct your research before making your investment decision.
You might have noticed that we mentioned all the mainstream cryptocurrencies as the next big cryptocurrencies. The reason is that the fundamentals of these cryptocurrencies are better than others. Moreover, they are better covered. The extensive coverage ensures that it is easy to know more about these cryptocurrencies before investing.
What is the investment methodology you should use to find the next big cryptocurrency?
You might get attracted by the exponential returns shown by cryptocurrencies in the past. You need to consider that it is tough for most of the cryptocurrencies to once again show the same returns. You need to keep in mind that you should follow proper investment principles to protect your capital and make good returns.
You have to be clear that you need to invest for the long term. If you plan on investing for just 6 to 8 months, chances are you might end up losing money. Hence, it is crucial to have the right investment strategy.
Long-term investment strategy:
By long term, we are talking about at least five years to seven years. You don’t have to worry about the short-term price volatility trends. You have to make sure that you invest for at least seven years. That, however, does not mean that you should forget about your investment right away. Keeping track of the fundamentals of cryptocurrency is good.
Strategy to follow:
You need to create a proper plan to invest in cryptocurrencies. We will highlight some of the main points of that strategy below.
• Diversifying your money:
You need to keep in mind that if you have a corpus of $ 50,000, you need to invest $ 5000 in cryptocurrencies. You can invest the rest of the amount in other assets. The other assets are relatively stable. Cryptocurrencies can quickly move around 20% in a single day. That is why; investing more than 10% of your portfolio in cryptocurrencies is not a good idea. Irrespective of the type of cryptocurrency which you invest in, it is always important to not exceed that amount.
• Creating a diverse portfolio of cryptocurrencies:
Once you have set aside 10% of your overall portfolio for cryptocurrency investments, it is essential to divide that 10% in 2 different cryptocurrencies. You should go with 4 to 5 options. It will ensure that your overall portfolio is pretty diversified. If you want to diversify you should always opt for cryptocurrency mutual funds. It will allow you to decrease the volatility of your portfolio.
• Go with the fundamentally strong cryptocurrencies:
Instead of just following the price movement of cryptocurrencies, it is important to always go with the cryptocurrencies whose fundamentals are clear. You have to look at the parent company as well as the founders. You have to look at the fundamentals of that cryptocurrency for the past one year to gain a good idea as to whether the developers are still behind it or not. There are many abandoned cryptocurrencies. You have to avoid those cryptocurrencies at all cost.
• Competitive edge:
You have to ensure that the cryptocurrencies in which you invest have a competitive edge as compared to others. When they have an advantage over others, it will be effortless for you to gain outperforming returns. If they are competing with other cryptocurrencies for the same size of the market, it will be challenging for you to make a sizeable amount of profit.
• Performance of the cryptocurrencies in the last few months:
If the cryptocurrency in which you are planning to invest has substantially risen in the past six months to 1 year, you should be cautious. You should not chase momentum. Ideally, when the cryptocurrency has been stagnant or has fallen, that is the right time to invest. Even if you invest in the right cryptocurrency but around the peak levels, you will not be able to gain good returns. That is why it is essential to track the performance of the cryptocurrencies before making the buying decision.
These are the few strategies which you should follow when it comes to investing in the next big cryptocurrency for the longer term.
Why should you go for the long term investments in the next big cryptocurrency?
The reasons why you should go for the long-term strategy are:
• You can beat the short-term volatility with the help of long-term investing.
• You can monitor the fundamentals more accurately when you go for long-term investing.
• You don’t need to follow the market at all times.
These 3 are the reasons why you should always go for long-term investing.
Three mistakes which you should avoid while investing in the next big cryptocurrency:
There are a few common mistakes which many investors make when it comes to investing in cryptocurrencies. These mistakes can wipe out your entire cryptocurrency portfolio. It will be tough for you to recover from such a loss. That is why it is crucial to avoid these mistakes at all cost. We will highlight them below.
1. Storing cryptocurrencies in online accounts:
Most of the people buy the cryptocurrency from the cryptocurrency exchange and let it be there. The problem with this is that it is susceptible to attacks. If your cryptocurrency exchange account gets hacked, it will be difficult for you to recover your cryptocurrencies. Hackers can transfer it to another account in a jiffy. That is why it is essential to always use cold storage for storing your cryptocurrency investments.
2. Not researching the exchange properly:
The number of cryptocurrency exchanges available these days is plenty. The problem is when you do not choose the right cryptocurrency exchange; your holdings are again at risk. The cryptocurrency exchange might shut down, or if it does not have adequate security, it might get hacked. That is why; it is good to always research in detail about the cryptocurrency exchange which you use.
Moreover, you have to look at the previous track record of the cryptocurrency exchange. If it has faced quite a few hacking attempts in the past, it is a good idea to avoid that cryptocurrency exchange. Only when it has a stellar safety record, you can go ahead and think about investing in the next big cryptocurrency using the cryptocurrency exchange.
3. Not diversifying enough:
Irrespective of the potential of the next big cryptocurrency, it is essential to diversify your cryptocurrency Holdings. You can go wrong if research resource which you use is not much informative. If all your savings or your portfolio is in a single cryptocurrency, and that does not go as per the plan, you will end up losing a significant amount of money. That is why it is essential for you to diversify your cryptocurrency Holdings.
You should avoid these mistakes while investing in the next big cryptocurrency.
So, when you’re searching for the next big cryptocurrency, it is essential to look at the options which we have listed above. It is vital to follow the strategy & tips which we highlighted above. These will help you gain exceptional returns and also ensure that you have an asset which you can invest in for a long time.