How to Choose the Best Cryptocurrencies to Invest In

Bitcoin (BTC)

The most profitable investments in Bitcoin tend to use the “buy and hold” strategy, also called position trading. Here are several reasons why BTC can be considered a valuable asset: 

1. Market domination. BTC’s market capitalization is about half of the entire cryptocurrency capitalization. It guarantees more price stability compared to other crypto assets.
2. Popularity. The cryptocurrency market can be easily influenced by media coverage, which tends to focus on bringing Bitcoin, the best-known cryptocurrency, to the public eye.
3. Demand. Bitcoin still ranks second place by the number of daily transactions, second only to Tether (USDT). BTC also supports the main liquidity pools of various DeFi projects, being one of the most sought-after buffer cryptocurrencies for exchanging various assets. The demand for BTC is also illustrated by the purchase of 400 BTC by El Salvador, a very rare example of a state officially adopting cryptocurrency. 
4. Limited supply. BTC is critically diminishing. More and more coins are frozen in sidechains, big investors are buying BTC for staking or simply placing capital into a potentially promising asset. The total about of BTC that can be mined is also finite by design. One day there will be no more new Bitcoin. In such an environment, demand will inevitably exceed supply, causing BTC value to increase.

Technically, Bitcoin (BTC) has many shortcomings, but its advantages greatly compensate for them. Thus, BTC has been and remains the most promising cryptocurrency for long-term investment when it comes to risk-benefit ratio.

Ethereum (ETH)

Ethereum is not just a cryptocurrency but one of the largest blockchain computing projects – a platform for creating decentralized blockchain-based online services based on smart contracts. Called the Ethereum network, this platform is a digital environment and technology provider used by many other major cryptocurrency projects. The objective reasons for Ethereum’s growth potential are:  

1. Technological use cases. The aforementioned Tether, also known as “the cryptocurrency dollar”, was initially based on ERC-20 tokens (ERC = Ethereum token standard). Many other popular and highly profitable applications are also based on ERC tokens, such as the NFTs used in CryptoKitties and NBA Top Shot. Virtually the entire NFT industry is based on Ethereum. Many cryptocurrency exchanges also use ETH in their operations. The vast majority of ICOs have been launched based on the Ethereum network. 
2. Continued development. Starting in 2018, Ethereum 2.0 is gradually being implemented, improving Ethereum services and addressing most of Ethereum’s weaknesses, including its limited scalability. 
3. An alternative investment. According to historical market data, ETH often rose in value when BTC was falling. Thus, Ethereum is a practical alternative to Bitcoin and a hedge against BTC’s volatility.

Ethereum was initially created as a software environment. It became the foundation for market development, promoting and improving the ideas that originally started with Bitcoin. Even the preparatory steps of Ethereum 2.0 adoption have left behind all of its potential competitors, and a full-fledged system upgrade will allow Ethereum to seriously compete with Bitcoin. Even in the unlikely event of the latter’s collapse, Ethereum has the potential to keep the cryptocurrency market afloat thanks to being essential to many innovative digital services.

Other Cryptocurrencies to Consider

Nowadays, there are almost no purely speculative projects among the largest cryptocurrencies. The main exception is Dogecoin (DOGE). This is an absolute bubble, a clear demonstration of the power of media coverage and hype on the cryptocurrency market. But there are many smaller cryptocurrencies that have interesting potential, both as tech solutions and as investments. So which altcoins (as in, alternatives to Bitcoin) should you consider?

The main aspects of promising crypto projects are: 

• potential applications, uniqueness, and relevance of the offered services;
• the credibility of technical solutions, the opinions of independent experts;
• technical features of the project, including the consensus method;
• the team and project’s development plans;
• who is backing it in terms of investors, community, etc.

If the project has already been launched, tested, and recognized as reliable, and it offers a popular service with notable differences from peers, has a professional team with clear long-term plans for development, and an active community has been formed around it, then it definitely has prospects. 

There are several established projects that fit this criterion, being potentially interesting for investors:

1. Cardano (ADA). This project develops the ideas of Ethereum – the creation of a digital environment for the operation of decentralized applications using smart contracts. It extends Ethereum’s functionality with sidechain and multi-party computing technologies.
2. Algorand (ALGO). Like Ethereum, this project is oriented to create decentralized applications, though it uses a new algorithm for consensus achievement (Byzantine Agreement). This consensus model greatly speeds up transaction processing and improves the decentralization and security of the network.
3. Solana (SOL). This project is also a blockchain designed to support scalable decentralized applications. Its key advantage is a unique consensus mechanism called Proof of History (PoH) that allows it to process up to 710,000 transactions per second. 
4. Tron (TRX). A blockchain platform created for decentralized exchange of free user-generated content. 
5. Polkadot (DOT). A multiplatform project that aims to combine all existing blockchains into a single global ecosystem – a Web 3.0 network with fully decentralized information exchange.
6. Binance Coin (BNB). An ERC-20 standard token is supplied as part of the Binance cryptocurrency ecosystem, including one of the largest cryptocurrency exchanges, an IEO platform, a blockchain platform, a decentralized wallet, and other services. 
7. Uniswap (UNI). One of the largest decentralized exchanges, whose automated liquidity protocol, built on the Ethereum blockchain, is widely used in DeFi services. 
8. Ripple (XRP). A cryptocurrency platform for payment systems as well as a huge cryptocurrency exchange. More than 50 banks based all over the world already use Ripple technologies. It can potentially be a competitor to the SWIFT system. The XRP token is the platform’s internal “cryptocurrency,” acting as a payment bridge and anti-spam tool.
9. VeChain (VET). An ecosystem product lifecycle management project that combines blockchain technology, smart contracts, and the Internet of things. The project’s blockchain is based on Ethereum, and VEN is an ERC-20 token.

All of the abovementioned cryptocurrency projects display the characteristics outlined at the beginning of this section. During 2021, they showed repeated growth and the potential for further development. The above list is not an exhaustive list of all interesting cryptocurrencies, nor is it an endorsement of any particular digital asset. Rather, take it as an example of how to analyze the prospects of any cryptocurrency when making your own informed investment decisions.

What Do Experts Say?

Our partners also commented on potentially interesting cryptocurrencies:

Rast Pentagon, Fund Fakel CEO

I would not recommend a lot of coins, especially for the long term. You can get too greedy with long-term crypto portfolios, and I prefer to stay rational. My advice would be to buy Bitcoin in the range of $10.000-20.000 until 2025 and then sell it after the halving event in 2025 at $150.000-200.000. Ethereum is the second-best asset in the long term, with an interesting buy zone in the $1.300-800 range. I plan to sell it simultaneously with BTC at $7.000-8.000 per ETH.

Vince Pellizzari, CoinsPaid Trader

This year a lot of new cryptocurrencies emerged and performed amazingly well, first-comers who were knowledgeable about this new market were able to take advantage of some of the best new cryptocurrencies. It’s not an easy task to find the diamond in the rough that could dominate the next ten years as BTC and ETH have done for the last decade. If I had to choose one, I’d pick Solana. The reason being is that the next trend in crypto is DeFi. Whether we want it or not, it will cannibalize traditional finance as we know it, just like the email did with traditional post offices. Solana is the blockchain for finance in my opinion, not only is it currently the cheapest one but also one of the most efficient in terms of transactions per second. In addition to that, the Solana environment has been one of the fastest-growing in the first half of 2021, we’ve seen Dapps like RAY and SRM which quickly became majors DEXes. Even the lesser-known dApps have still proven really useful, such as LIQ, a liquidation protocol for decentralized derivatives exchanges. Even though Solana is not fully decentralized, it still remains in the race to be a leading blockchain in the next couple of years, as it is to this day way better than ETH and the BSC for everything related to DeFi.

Ivan Kibalchich, Yosu CEO

Nowadays, in addition to BTC, ETH, and Tron, I’ve become interested in the emerging Play to Earn games sector. It is a new and fast-growing market segment, and along with the general crypto market growth, there is potential to make large profits there. Among the token projects, I would highlight Axie Infinity, Illuvium, and Journey to God as being especially interesting.