Is It a Good Time to Invest in the Top Cryptocurrencies?

Should I buy crypto now?

Disclaimer: This is not financial advice, do your own research and consult a financial adviser before investing in Crypto or Stocks.

The cryptocurencies market-cap retraced 85% from its high in January 2018

EXCLUDING BITCOIN MARKET CAPITALIZATION

What happened to crypto!?

At the time of writing, cryptocurrencies are still in a BEAR market that has been lasting for more than 2 years. After the initial drop from 400 billion, the market has been unable to surpass the 100 billion point, right now it is at 69 billion. This figure represents the remainder of capital left in the crypto industry after most of the hype fizzled out.


Cryptocurrencies market capitalization 2018 – 2020 (excluding Bitcoin)

After the crash many projects ground to a halt and eventually got liquidated. In light of COVID-19 it is likely that a few more might join their ranks, while for other projects it could be the catalyst that brings new capital in. As the world is trying to work remotely on a largescale, the blockchain ecosystems could be the perfect vehicles to create trust and transparency where needed, as well as providing cost-effective solutions for disrupted industries.

Whether the world will turn to decentralized solutions, or use existing framework and tech is anybody’s guess, but the early trend is suggesting the latter. Blockchain technology was born into a bull market decade where stocks soared and many investors were RISK-ON. Whether or not these projects will have actual adoption in the world is the question you must ask yourself when thinking about investing in them.

If most big investors decide to go RISK-OFF in the next decade, it could be bad news for a lot of cryptos, with only the most utilized blockchains gaining significant market value. In this environment only the increase in productivity will be important. Big investors could get very picky about where they park their money in the coming years, should the stock market not recover as quickly as in the past.


The difference between investing and trading with cryptocurrencies

The crypto market is a great place for the diligent trader, looking for volatility and opportunity in the price action. As an investor you need to understand, it is likely the most volatile market in the world today. Any investor with a weak stomach should probably avoid cryptocurrencies altogether. Investors need to do enough research and be sufficiently confident about where a particular project is headed in the next 5 years to a decade before taking action on a crypto investment.

Investors may want to consider a dollar-cost averaging system and accumulate amounts over time. With trading and investing it is usually best to allocate a smaller percentage of net worth to cryptocurrencies as these should be balanced with lower risk asset types in your portfolio.



How not to invest in cryptocurrencies

In a lot of ways investing comes down to your personal finances. Many people have lost their jobs due to COVID-19, resulting in widespread personal and economic uncertainty. According to the UN, the pandemic is likely to eradicate the equivalent of 195 million jobs.

In light of this, on a personal and economic level, future investments will need careful consideration. Many people are seeing losses on their stock portfolios and subsequently selling off some of their holdings to look for safer havens. For someone in this situation, jumping into a new cryptocurrency now, without fully researching and analyzing the project, could just make matters worse.

Here are a few fundamental beginner tips for crypto investing that will help you avoid this scenario.

  1. Don’t FOMO (Fear of missing out)
  2. Don’t make uneducated decisions. If you are new to cryptocurrencies take your time to educate yourself as best possible.
  3. Don’t buy off a rumor, blog post, tweet, etc. Do your diligence.
  4. Don’t use any capital that you cannot afford to lose.
  5. Know how to store and protect your cryptos.
  6. Learn about the avoidable ways in which people lose their cryptocurrencies.
  7. Try to invest in cryptocurrencies that align with your interests.
  8. Never invest when emotional, angry or frustrated. Always be clear-headed and certain WHY you CHOOSE to invest in a volatile asset.
  9. If at all possible, consult a professional financial advisor that understands the market.
  10. Use a trusted exchange like Binance to buy and sell cryptocurrencies securely.

Why the top cryptocurrencies?

Since Bitcoin’s inception in 2009, many new blockchain projects were created, and today an estimated 5000+ cryptos exist, according to Coinmarketcap. For this reason, a lot of investors choose to only look at the very top cryptocurrencies. They are generally ranked via market capitalization, similar to equities, however, there are many things to consider as a crypto investor.

Most of these projects are opensource and community-driven, with a lot of data available to the public, and there is a wealth of information for the diligent researcher. With blockchain ledgers being so transparent it is possible to gauge many factors of a potential investment, such as the number of transactions per day, the average size of transactions, hash rates, to mention a few things.

One of the most important factors is the liquidity of the markets. The top cryptocurrencies have proven themselves time and again to be a very liquid (although volatile) asset class. Some of these cryptocurrencies have market capitalization well over 100 million dollars and the top 10 cryptocurrencies tend to be well over 1 billion dollars in market capitalization, which is nothing to sneeze at. These projects have real adoption taking place and continue to innovate and develop, a trend that is quite hard for any savvy investor to ignore.


Top cryptocurrencies list

Below you can find an interactive list of the top 100 cryptocurrencies, at the top of over 500 projects ranked according to their market capitalization. There are also other metrics that you can select within the chart such as trading volume, percentage change and so forth.



What are the fundamentals saying

After more than a 2-year BEAR cycle in the cryptocurrency space, a lot of the development behind the scenes has not stopped. However big amount of speculators declared cryptos dead, and many moved out of the market. Some might argue that without this element, now might be the perfect time to re-evaluate cryptocurrencies.

While prices can easily go down more from here, the implementation of blockchain solutions in this pandemic will spur on investors and traders, similar to some medical stocks right now. This is something to be on the lookout for. It still remains to be seen if blockchain technology will be boosted by the new social and economic dynamics, and if so, which projects will still be around a decade from now?


Is it a good time to invest in the top cryptocurrencies: This depends on you and your portfolio

In a nutshell, whether or not it is a good time to invest in the top cryptocurrencies depends largely on your personal financial situation, your appetite for risk in your portfolio, as well as whether you can take the time to research potential projects adequately, in order to make an informed investment.

Please bear in mind that this was a very basic introduction to investing in cryptocurrencies. Many fundamentals need to be considered, cost of mining, cryptocurrency legislation and technical developments to name but a few. Jump onto our push notifications for future posts on these and other crypto investing topics if you wish to learn more.

Looking for the movers and shakers among the top cryptocurrencies? Bookmark our Crypto Screener page and always be up to date with market moves.