Best Cryptocurrency Investments: Where To Put Your Money Now

Investing in cryptocurrencies is a daunting task for beginners and experts alike. With thousands of coins to choose from, the crypto market is highly volatile and unpredictable. However, it has also generated incredible gains for long-term investors.

Bitcoin and Ethereum are the two most dominant cryptocurrencies in the market. Their market capitalizations comprise about 70% of the $2.04 trillion global crypto market. Other major cryptocurrencies include Binance Coin, Solana, XRP, Dogecoin, Toncoin, Cardano, and Avalanche.

When deciding which crypto to invest in, it is important to consider your financial situation and risk tolerance. Here are some general guidelines to keep in mind:

- Never invest more than you can afford to lose.

- Use dollar-cost averaging.

- Research and stick to the fundamentals.

- Stick to major cryptocurrencies.

- Employ common sense and avoid falling prey to the fear of missing out.

- Understand the underlying technology.

- Stay up-to-date with regulations and legal cases.

- Use crypto indicators to inform decision-making.

- Stay disciplined and maintain a long-term outlook.

How to choose the best crypto to invest in

The cryptocurrency market is known for its volatility and unpredictability, but it has also generated incredible gains for long-term investors. With thousands of cryptocurrencies available today, choosing the right one to invest in can be challenging. Here are some tips to help you make an informed decision:

Understand the Basics

Before investing in any cryptocurrency, it is essential to understand the basics of this asset class. Cryptocurrencies are digital assets that are secured by cryptography and typically operate on a decentralised blockchain network. They are often used as a medium of exchange, a store of value, or for online transactions. Each cryptocurrency has its unique features, such as decentralised finance (DeFi) services, smart contracts, and non-fungible tokens (NFTs). Understanding these fundamentals will help you make more informed investment decisions.

Assess the Risks

Cryptocurrencies are highly volatile and carry significant risks. Their values can fluctuate widely in response to news, regulatory changes, and market sentiment. It is crucial to recognise that investing in cryptocurrencies is speculative, and you should only invest what you can afford to lose. Diversifying your investments across multiple cryptocurrencies and maintaining a balanced portfolio can help manage these risks.

Consider Established Cryptocurrencies

When choosing a cryptocurrency to invest in, it is generally advisable to favour established coins with larger market capitalisations, such as Bitcoin and Ethereum. These cryptocurrencies have a first-mover advantage, wider adoption, and have demonstrated their resilience over multiple market cycles. Their strong brand recognition and extensive use cases also contribute to their perceived stability.

Research and Due Diligence

Conducting thorough research is vital before investing in any cryptocurrency. Evaluate the real-world adoption potential, review the technical specifications, and assess the credibility of the development team. Scrutinise the whitepaper, roadmap, and community engagement to gauge the project's long-term viability. Additionally, consider the utility of the token, transaction speed and scalability, network security, and competitive advantages over other cryptos.

Understand Regulatory Landscape

The regulatory landscape surrounding cryptocurrencies is constantly evolving, and it is essential to stay informed about any changes. Follow legal cases, regulatory developments, and legislative proposals related to crypto in your country and internationally. Regulatory actions can significantly impact prices and the overall adoption of cryptocurrencies.

Long-Term Outlook

Approach cryptocurrency investing with a long-term perspective. Avoid getting caught up in short-term price swings and speculative hype. Assess the fundamental strengths of the project, its potential for widespread adoption, and its ability to withstand market downturns. Remember that investing in cryptocurrencies is a marathon, not a sprint.

Manage Your Portfolio

Creating a well-diversified portfolio is essential to managing risk effectively. Allocate your investments across multiple cryptocurrencies, focusing on established coins and selectively investing in newer projects with strong fundamentals. Regularly review and rebalance your portfolio as necessary, taking profits from major assets to invest in promising new opportunities.

Secure Storage

Ensuring the safe storage of your cryptocurrencies is of utmost importance. Utilise hardware wallets, such as Trezor or Ledger, or consider software-based wallets like Electrum. These options provide enhanced security features like offline storage, encryption, and recovery phrases. Additionally, practice good cybersecurity hygiene by using strong passwords and protecting your recovery phrases from electronic storage.

Dollar-Cost Averaging

Consider using dollar-cost averaging as a strategy to build your cryptocurrency position over time. This approach involves making small, regular purchases of crypto on a set schedule, such as weekly or monthly. By automating these purchases through an exchange, you can avoid the emotional aspect of trying to time the market and reduce the impact of volatility on your investments.

Consult Professionals

If you are new to cryptocurrency investing or unsure about a particular investment, consider seeking guidance from fee-based financial advisors. They can provide tailored advice based on your financial situation, risk tolerance, and investment goals. Remember that investing in cryptocurrencies should be a well-informed decision, and it is always better to seek expert help than to act on impulse.

Pros and cons of investing in crypto

Pros of Investing in Crypto

• Cryptocurrencies are supported by secure, decentralized blockchain technology, independent of traditional banking systems.
• The chance of greater returns due to market volatility.
• The blockchain technology underlying cryptocurrency is inherently secure.
• Bye bye traditional banks—hello to a fairer, more transparent financial system.
• Crypto trades around the clock.
• Cryptocurrencies could help investors beat inflation.
• Accessibility and financial inclusion: cryptocurrencies have the potential to provide financial services to the unbanked and underbanked populations around the world.

Cons of Investing in Crypto

• Extreme price fluctuations.
• Steep learning curve.
• It can be tough to scale widely.
• It is still uncertain whether cryptocurrencies will stay viable in the long term.
• There are also security vulnerabilities that may pose significant risks, especially to new investors.
• Crypto has serious scalability issues.
• Crypto newbies are vulnerable to security risks.
• The rules and regulations aren’t set in stone.

How much does it cost to buy cryptocurrency?

The cost of buying cryptocurrency depends on several factors, including the type of crypto you are buying and the platform you are using to buy it. Many small altcoins trade for a fraction of a cent, while a single bitcoin will cost you tens of thousands of dollars. However, many brokerages and exchanges now allow fractional trading, giving investors the option to buy a portion of a cryptocurrency.

There are also costs and fees associated with having a crypto wallet and/or an account on a brokerage or crypto exchange. These can include fund transfer fees to/from your bank account, maker/taker fees, set transaction fees, or tiered transaction fees based on trading volume. It's important to understand all the costs associated with buying and holding any cryptocurrency before investing.

Cryptocurrency Exchanges

You can purchase cryptocurrencies from dedicated exchanges such as Gemini, Kraken, Coinbase, Crypto.com, and Binance. These exchanges offer a variety of different fees and consumer protections, so it's important to research them thoroughly before choosing one.

Traditional Stockbrokers

A few traditional brokers, such as Robinhood, Webull, TradeStation, and Fidelity, offer their customers a way to buy and sell Bitcoin. Like its stock-trading platform, Robinhood charges no fees for Bitcoin trades.

Bitcoin ATMs

These work like normal ATMs, but you can use them to buy and sell Bitcoin. They are often placed in locations where you might find normal ATMs, such as convenience stores. Be sure to look at the fees you'll be charged, and have a plan for where to send the Bitcoin once you buy it.

Peer-to-Peer Money Transfer Apps

Cash transfer services like PayPal, Venmo, or Cash App allow their users to purchase Bitcoin and other cryptocurrencies using the apps. You can purchase, store, send and sell Bitcoin directly through the apps, which is convenient if you're used to those interfaces.

In-App Purchases

Some crypto apps, such as games, crypto wallets, or other online services that use blockchain technology, allow users to buy and sell digital assets directly within their app. These services can cost a bit more than regular exchanges but offer quick and relatively painless transactions.

How to buy cryptocurrency

Before investing in any cryptocurrency, it is important to understand the risks involved. Crypto is a highly volatile asset class and may be more susceptible to market manipulation than securities. Crypto is also not insured by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation, meaning that if you lose your investment due to, say, a scam or fraud (which are prevalent in the crypto space), you may not get your money back.

With that in mind, here is a step-by-step guide on how to buy cryptocurrency:

• Choose a broker or crypto exchange: A broker takes the complexity out of purchasing crypto by offering easy-to-use interfaces that interact with exchanges for you. Examples of brokers include Robinhood and SoFi. A crypto exchange, on the other hand, is a platform where buyers and sellers meet to trade cryptocurrencies. Examples of exchanges include Coinbase, Gemini, and Binance.US.
• Create and verify your account: Depending on the platform and the amount you plan to buy, you may have to verify your identity by submitting a copy of your driver's license or passport.
• Deposit cash to invest: You'll need to link your bank account or authorize a wire transfer to deposit money into your crypto account. You may also be able to use a debit or credit card, but beware of the high fees associated with this payment method.
• Place your cryptocurrency order: With money in your account, you're ready to place your first order. You can purchase fractional shares of cryptocurrency, allowing you to buy a sliver of high-priced tokens like Bitcoin or Ethereum.
• Select a storage method: You can leave the crypto on the exchange in a "hot wallet" (stored online) or transfer it off the exchange to a separate "cold wallet" (stored offline). Cold wallets are more secure but less convenient.

In addition to the steps above, here are some key points to keep in mind:

• Do your research: Understand how crypto works, why it fluctuates in value, and what that could mean for your investments.
• Consider the fees: Both brokers and exchanges charge various fees for their services. These can include maker fees, taker fees, and fees for depositing and withdrawing funds.
• Be aware of the risks: Crypto is a risky and volatile investment. Only invest what you can afford to lose.
• Understand the regulatory environment: The future regulatory environment for crypto is uncertain. This could impact the value of your investment.
• Diversify your portfolio: Consider investing in a range of different cryptocurrencies to spread your risk.
• Withdraw your crypto: If you want true control over your coins, consider withdrawing them from the exchange or broker and storing them in a crypto wallet.
• Keep your keys safe: Remember, "not your keys, not your coins!" If you lose the keys to your crypto wallet, you could lose access to your investment.

Finally, when you are ready to buy, you can use one of the four main ways to purchase crypto:

• Cryptocurrency wallet apps: Such as the Bitcoin.com Wallet app.
• Brokerages: Such as eToro.
• Cryptocurrency centralized exchanges (CEXs): Such as Coinbase, Gemini, and Binance.US.
• Peer-to-peer crypto exchange platforms: Such as Peach Bitcoin.

Crypto trading

When deciding which cryptocurrencies to invest in, it is important to conduct thorough research and understand the unique characteristics and risks associated with each coin. Here are some key considerations for crypto trading:

• Market Capitalization: Larger cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) tend to be more established and have higher market capitalizations. They are widely accepted and have a first-mover advantage.
• Volatility: The cryptocurrency market is known for its extreme volatility, with prices fluctuating significantly over short periods. This presents opportunities for gains but also increases the risk of losses.
• Adoption and Utility: Consider the real-world adoption and utility of a cryptocurrency. Some coins, like Ethereum, have widespread utility due to their smart contract functionality and decentralised finance applications.
• Technology and Security: Understand the underlying technology powering crypto assets, such as blockchain networks, consensus mechanisms, and hashing algorithms. Assess the security measures in place to protect your investments.
• Regulatory Environment: Stay informed about relevant legal cases, regulatory developments, and legislative proposals related to crypto. These can impact prices and adoption, as seen with the approval of Bitcoin ETFs.
• Technical Indicators: While crypto's volatility makes accurate predictions challenging, technical indicators like moving averages and relative strength can help time your entries and exits in the market.
• Risk Management: Crypto trading is a high-risk endeavour. It is generally recommended to limit your crypto allocation to less than 5% of your total portfolio and only invest what you can afford to lose.
• Bitcoin (BTC): The original cryptocurrency and the largest by market capitalization. It has strong brand recognition and a decentralised transaction verification system.
• Ethereum (ETH): The second-largest cryptocurrency, known for its smart contract functionality and decentralised applications. Ethereum has a large developer community and has transitioned to a less energy-intensive proof-of-stake system.
• Binance Coin (BNB): The native cryptocurrency of the Binance exchange, offering benefits such as discounted trading fees. BNB has evolved to power its own ecosystem and compete with Ethereum.
• Solana (SOL): A fast, low-fee blockchain platform known for its scalability and ability to support smart contracts, decentralised applications, and non-fungible tokens.
• Dogecoin (DOGE): A meme coin that gained popularity and a passionate community. Endorsed by celebrities like Elon Musk, Dogecoin has become a legitimate investment for some crypto traders.
• Toncoin (TON): A "layer 1" blockchain with smart contract capabilities and speed advantages over Ethereum. It has seen significant growth in 2024 and could attract more developers.
• Render Token (RNDR): A unique rendering network that allows users to rent out GPU power for rendering. It has seen increasing demand, especially with the popularity of AI-generated images.
• Avalanche (AVAX): A blockchain with ambitious goals, allowing users to deploy their own mini-blockchains. It offers fast transaction processing times and incentives for active participation within the network.

Frequently asked questions