First, it crossed $10K. Two weeks later, it plummets to $5K. Fast forward one week, Bitcoin grows over $6K as if nothing happened.
“If you are not confused, you don´t know what is going on.” Jack Welch said.
Uncertainty rules the world since the COVID-19 expanded. Most stocks have gone down, and investors expect them to drop another 20% by the end of the year.
Yes, winter is here.
Wait. How about the digital world? Should we change our strategy? Today may be a good time to buy some Bitcoin. But what do you say about the thousands lost when it dropped recently?
The events show that even the most stable cryptocurrency can surprise us anytime. Perhaps the perfect coin to invest doesn’t exist.
No crypto will grow forever, but that doesn’t mean you cannot make money. Investors expect Stablecoins to grow despite the setbacks. Finance hasn’t stopped: it’s a temporal slow down. Now, those who saved have the chance to buy for cheap and make bigger returns.
Now, what would the perfect cryptocurrency look like? Once we find out, it becomes much easier to pick and allocate.
The best cryptocurrency to invest in 2020
Everybody wants to buy the best coin. The catch is, every person judges the market differently. One may think that what’s popular is always the best.
But that’s rarely the case. Unless everybody is rich, the “Everybody rule” won’t work. Most invest at the wrong time because they come in late to the market.
Now, let’s look at value instead of market perception. If you always want to win in the crypto-market, what should you look for?
Stable cryptocurrencies are, by definition, the most reliable for long term investors. These include reliable market history and should take over 70% of your investments.
A stable coin has a limited negative cap. Look at Bitcoin: even after the recent crash, it never went below $4K. It recovers almost as fast as it went down.
It’s not easy to create a stable coin like Bitcoin. Also, the vast majority of mining goes through Bitcoin.
With hundreds of altcoins out there, it wouldn’t surprise if at least one of them evolves as a “stable coin.” This transformation isn’t easy to do, so as soon as you find this hypothetical coin, you should research immediately.
You could get in first for an emerging market and make a fortune.
#3 Exponential Growth
Events may affect linearly, but technology is exponential. The more a coin costs, the harder it is to fall to zero.
Bitcoin and other expensive coins may be difficult to predict for a day trader, but long-term investors get an advantage.
Coins worth hundreds of dollars usually have enough track records to make accurate predictions based on practical value.
#4 Different Technologies
Look at the mainstream cryptocurrencies: Bitcoin, Ripple, Ethereum, Litecoin. If you look at the yearly charts, many of them are the same.
Prices rise and fall at the same time as if all of them were connected. Even if you wanted to diversify, it wouldn’t work because every coin follows the same pattern.
We aren’t saying Bitcoin works the same as, say, Ethereum. Imagine we find a new cryptocurrency at the caliber of the primary altcoins. If this coin shows other patterns, those differences would be worth researching.
Think of it: is there any coin that hasn’t been affected by the March 12th drop? Bitcoin dropped by 40%. Binance Coin dropped by 25%, excluding the February all-time high.
Top 3 Cryptocurrencies For The “Watch List”
Today, the most expensive coins are BTC, ETH, and XRP. Despite the exceptions, these three are the closest concepts to the “perfect crypto-coin.”
Why Bitcoin, Ethereum, and Ripple?
Bitcoin: The Go-To Cryptocurrency
In 2020, BTC is the most widespread coin out there. Its market is more developed, which makes prices stabilize.
Buying Bitcoin no longer makes investors special. Over 100 million people own BTC in 2020, a good chunk of the economy. Due to its size, you could say crypto-trading IS Bitcoin.
That’s why it makes sense to keep updated about Bitcoin, even if you buy unrelated crypto. If something affects BTC, it’s representative enough to influence other coins.
Imagine you owned Bitcoin and Ethereum. BTC starts to go down on March 12th at 10 AM, but ETH falls half an hour later. If you notice it on time, you could have sold Ethereum based on the Bitcoin performance before it fell.
Ripple Network: The Coin For Banking And Finance
Like ETH, transfers happen within seconds at a low cost. Unlike Bitcoin, Ripple has pre-mined crypto-coins to trade.
XRP is not another version of BTC. It servers a completely different market. XRP servers for banks and financial institutions as a safe payment method.
Decentralized currency? XRP is tricky. A private conglomerate manages the Ripple Network by consensus. The CEO of RippleNet believes that the crypto-currency will attract investors once it’s regulated.
Ethereum: The Largest Software Platform Powered By Ether
Apart from payments, Ether servers for financial agreements and applications. These functions make it the best Bitcoin alternative in 2020.
Whenever someone trades ETH, a computer runs an application in a large software platform. It may not be worth as much as BTC, but it’s better for traders due to the transaction speed.
Remember the March 12th example? You could not save Bitcoin because transactions take over 15 minutes. By the time you take action, values have changed, which makes it hard for day trading.
But Ether transfers in seconds.
Market caps make another difference. Compare Bitcoin’s $160B to Ethereum’s $16B.
The Best Crypto Strategy For 2020
A few months ago, people thought Bitcoin would reach $100K. Today, they wonder if it will ever recover from the $5K. It will continue to change as it has always done.
Of course, it’s about buying low and selling high. But how do you know when the trend will change? If everybody can explain a trend after it happened, why couldn’t they see it before?
Winning strategies are all about probability, not predictions. You will always make money if you limit the risk you take.
The crypto market is volatile. Even a well-thought prediction is uncertain. Then, what’ the strategy?
#1 Start small
Do you want to start trading crypto? Start by something you don’t mind losing. You don’t need to put thousands to catch next week’s bull market. You can’t lose if you don’t risk much.
#2 Split Among The Top 5
Even the best crypto-currencies have flaws. At best, 60% should go to Bitcoin, Ethereum, Litecoin, Ripple, or Dash. Keep it simple and start with a small group.
Don’t try to allocate the first time. Split into equal parts and see how it evolves. Use those weeks to observe. Research and try to understand what makes values fluctuate.
Once you give a generous amount of time, you allocate your assets. You can convert the non-performing currencies to the others that work.
You can add extra cash as long as you don’t mind losing it. After you optimize, around 80% should go to three cryptos.
#4 Choose Your Goals
Now, you have some activity. You have basic knowledge about how the crypto market works. What will you do with those results?
Let’s assume you follow the classic Buy And Hold method.
- You can hold for years until prices skyrocket.
- You wait for the ups and downs to buy and sell.
- You hold for years, but keep buying when prices are low.
As you’ve seen, most stable-coin charts look the same. You don’t need to learn everything about the coin you invest. If you research Bitcoin, you’ll already know 90% of the facts.
If you want to be an active trader, choose Ethereum or Ripple. Transaction fees aren’t as heavy, and you can move amounts within seconds. Speed is key for a day trader.
If you want to hold or wait to buy for cheap, Bitcoin works well.
There’s only one rule: stay in the market. It’s better to buy than to sell, even with the wrong timing. In the long term, projections are always good.
#5 Remove The Fear Of Losing
As a passive income stream, investing can make a fortune. However, you should look at crypto distantly to stay away from the hype and make the right decisions.
By distance, we mean treating your investment like working capital. You don’t take it out to fund your lifestyle. You look at it as emergency income; reinvest all your returns instead of using real money.
Remember, you need big amounts to make it multiply fast. Once the growth speed is enough for you, you can get out of your initial investment if you want.
Before you know it, you have generated 10X, 20X, 50X.
The best investment decisions are based on long-term market value.
The crypto markets will make investors more money than what they lose as long as they take a responsible approach.
Marc Cuban said “It’s OK to invest up to 10% of your savings on crypto. But if you do that, you have to pretend as if you’ve already lost your money.”