When you’re getting ready to play on the cryptocurrency market, you’ve got more than 2,000 coins, all of which are promising to revolutionize this or that, be the next something or other, or plain old change the world. So, if you’re not a veteran to the tribulations of crypto, the big question is going to be, “What is the best cryptocurrency to invest in?”
The answer, of course, is that everyone must do their own research and not take advice from anyone not fully authorized to give advice. On the other hand, if you’re just looking to understand the market, there’s no better place to look than Bitcoin.
Bitcoin has had a wild ride. Ten years after its protocol was announced to the world, it is one of the most interesting things that has happened in finances in centuries. And if you know anything about the crypto market, you know Bitcoin is the king and are probably secretly already convinced it’s the best cryptocurrency to invest in.
It probably is, but do you know why?
Would you have said Bitcoin was the best cryptocurrency to invest in when it dropped 59% within a month and a half, in early 2018? Well, it looks like the days of crazy volatility for Bitcoin are over. Since June, in fact, it had three dips between 9–10%, twice in June and once in September, before the correction that’s been keeping Bitcoin in sight of the $6,500 mark for almost two months. For most of the interval, price changes were in the range of -1% to 1%.
This year, volatility reduction has been big news for Bitcoin, after the crazy ride of last year, when the top coin started the year at $1,000 and finished it well over $10,000. This year, the big question is whether the $6,000 bottom will hold. Going over $7,000 seems unlikely now, despite various pundits claiming Bitcoin would moon — but then, who knew, last October, that prices would go up by more than $10,000 before the end of the year? Predictions are hard.
Best YoY growth
If you’ve looked at traditional stocks, you may be excited about Microsoft stability or Amazon growth. Both are laudable, but they are nothing compared to the kind of year-over-year growth that Bitcoin has seen, despite the dips and slumps. The chart below shows that NASDAQ trading is cute bunnies compared to the wild ride — and wild gains — of Bitcoin. Not for the light-hearted, though.
ROI or money?
What do you prefer: returns on investments or money? Because if you think ROI is a valid measure of success, the best cryptocurrency to invest in should be IOTA or NXT, which are respectable coins with a return of over 400,000% and over 1,200,000% respectively.
If you bought 1,000 IOTA when it launched, you would have spent $1 in 2015. Now it’s sitting around $0.49, so your 1,000 IOTA coins would be worth… $490.
If you bought NXT in 2013, when it was among the blockchain pioneers, you would have paid $0.0000168. 1,000 coins would have set you back a staggering $0.0168. As NXT is now worth $0.059, you could sell your treasure trove for $59.
While these are amazing performances, and you should, in fact, invest massively in such coins for the simple reason that you are getting money for nothing and supporting smart projects, these coins will not only not make you rich; you will have missed on the fun of trading for weightier amounts and, more importantly, you will have missed out on the prime mover of the crypto market. Because everyone probably also thinks Bitcoin is the best cryptocurrency to invest in, other coins are somewhat pegged to it. Here’s how.
Ancient wisdom (so to speak) says that Bitcoin is the king of the crypto world. Not just because it is the oldest blockchain coin, but because it appears to have one of the most solid cryptoeconomic models out there, with a limited supply, a smart rewards system and a solid proof-of-work mechanism that has kept the blockchain healthy for nearly ten years.
Another piece of tried-and-true wisdom on the cryptocurrency market is that investors should always look to Bitcoin when they make their bets. When Bitcoin goes up, other cryptocurrencies do not go up nearly as much. That is mainly because, although price increases signal a bull market, many traders will rush into long trading and dump altcoins.
On the other hand, when Bitcoin goes down, traders take it as a sign of a bear market, so they rush to either buy more expensive coins in hope of a future increase, or rush to exchange into fiat whatever coins they hold, taking the Bitcoin drop as an exit signal.
As a trader or investor, then, it always makes sense to check on Bitcoin trends before you move your currency around. And if Bitcoin is not the best cryptocurrency to invest in right at this moment, you can always train your trading bots to come back to it when the price is right.
… but diversify
While Bitcoin makes the most sense as a long-term investment, you don’t have to buy a full bitcoin. Start small, maybe even as low as a few satoshis, just to get the flow going. And while you do, remember it’s never a good idea to put all your eggs in one basket.
What makes the most sense is to buy Bitcoin on one hand, and then several smaller cryptocoins or tokens. You could try a combination of Litecoin (or Monero, or Ethereum, or whatever your second best might be) and then several ICO tokens, which you usually get dirt cheap during the ICO. If you choose right, your tokens might have the fate of NXT or IOTA. Even a 5,000% ROI wouldn’t be half bad. Because even if Bitcoin is probably the best cryptocurrency to invest in, your other investments will cost you less and help spread the risk — always a good strategy.