2.1.0. Choosing the Right Cryptocurrency
In hodling, your goal is to have a cryptocurrency that will increase in price in the future. There are more than 10 000 cryptocurrencies in the Crypto Market. How do you know which cryptocurrencies you should hodl?
Basically, there are two techniques that you can use to determine which cryptos will likely increase in price in the future and yield good ROI:
(a). Survey Technique
(b). Analytical Technique.
2.1.1. Survey Technique
This requires the survey of the market capitalisation to pick the right cryptos to invest in. Market capitalisation is a very good index for determining the success of a crypto. Mathematically, it is calculated as follows:
Market Capitalisation = Circulating Supply x Market Price
From the mathematical expression, these two factors are very important in determining the future of a crypto:
• Circulating Supply – this refers to the amount of the crypto available for trading.
• Market Price – this is the price of the crypto in the market.
Generally, it is known that the higher the market capitalisation of a crypto, the more secured it is for investment. You wouldn’t want to invest in a crypto that will disappear after a couple of months.
Benefits of the Survey Technique
The benefits of using the Survey Technique to make a choice of crypto investment are:
(a). It is a simple and an easy method
Any newcomer to the Crypto Market can easily use this method. See the practical steps in Module 3.0.0.
(b). It is safer
For a crypto to rise from among thousands to the top in market capitalisation, it means that crypto has a good market force that drives its market volumes, hence, has good prospects for price appreciation. Therefore, market capitalisation is a much safer method for choosing which crypto to invest in than to just randomly select cryptos or follow the over-hyped noise on social media.
However, note that being among the Top 20 does not mean the crypto will retain its position permanently. There are other things that must be in place for a crypto to remain among the best performing ones in the Crypto Market. That leads us to the second method of choosing a crypto for hodling, which is the Analytical Technique.
There are new cryptos that are being created every week. Some of these new cryptos have better use cases than some of the Top 20 cryptos. Investment in some of these new cryptos can positively turn your finances around!
The challenge is knowing which of these new cryptos are having good prospects. This is where the Analytical Technique is invaluable and it is discussed in the Tertiary School of Cryptocurrencies (school.edaface.com/course/tertiary-SOC) of EdaFace Academy.