Before investing in cryptocurrency, many factors should be studied.
Use case
We should try to find out for what purpose this cryptocurrency is being used. If cryptocurrency is being used for transactions or to fulfill other purposes of life, then it means that the future of cryptocurrency is bright.
Technology
If cryptocurrency is based on the technology of block chain then its future is bright.
Market cap
If the market cap of a cryptocurrency is very large then it is considered a good investment.
Trading volume
Just as in the stock market we prefer to buy those stocks which have high trading volume, similarly in cryptocurrency too, it can be beneficial to trade or invest in crypto currency with high trading volume.
Development team
The developer team of any cryptocurrency is an important asset that helps in maintaining the project in the long run.we should study about track record of development team
Community
If the community of a cryptocurrency is large enough, then it helps a lot in spreading awareness about the cryptocurrency and increasing its demand. If the community of a cryptocurrency is large enough, then we can invest in it.
Collaborations with Major Companies:
Partnership with established companies is helpful in making the future of cryptocurrency good or bright. We should see whether the project in which we are investing in cryptocurrency has a partnership with any organization or company or not.
Real world acceptability
If any cryptocurrency is used as a medium of transactions by big companies or big organizations of the world, then it would be better to invest in that cryptocurrency.
Supply
If the supply of cryptocurrency is in limited quantity then its value increases. On the contrary, if the supply of cryptocurrency is in unlimited quantity then its value falls after a long time.
Use of tools to research
Investors must use a variety of tools to obtain information about cryptocurrencies.
Market research platforms to be used Coin market cap and Coin Gecko give us information about the market cap price history and trading volume of any cryptocurrency
Platforms like Glass node and Dune Analytics provide us with blockchain data of cryptocurrencies, through which we get information about trading volume, wallet activity and network health, which provides important help in researching about cryptocurrencies.
News and announcement
CoinDesk, and CryptoSlate are the platforms that provide us with crypto related news.crypto releated news helps us to take decision for investment
Creating a crypto investment strategy
1-Make a basket of cryptocurrencies i.e. do not invest in one type of cryptocurrency, invest in different types of cryptocurrencies so that your portfolio gets diversified.
2-Keep up to date with changes and developments in the cryptocurrency space such as decentralized finance (DeFi), non-fungible tokens (NFTs), and layer-2 solutions. Cryptocurrencies related to these trends are often positioned for significant growth as the market evolves.
3-We should keep an eye on where institutional investors are investing and what is the reason for their investment.
Practical tips
1-New investos should invest in small quantity to learn and earn
2-Invest in reputed exchanges.
3- Keep your cryptos in trust wallets or hardware wallets
3- Stay updated
Conclusion
After reading this article, readers must have understood that investing in cryptocurrency requires the same amount of research as research in the stock market. We should not invest in any cryptocurrency without thinking.
It is important to have information about trading volume, market cap, technology, partnerships with institutions, where cryptocurrency is being used.