HOW TO DISCOVER WHICH CRYPTOCURRENCY IS BEST TO BUY NOW AS A BEGINNER

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In recent times Memes tokens like Shiba Inu and Dogecoin have shown somewhat dramatic profits.

This relative performance of the Memes tokens had caught the attention of crypto enthusiasts and the public at large.

Unfortunately, such tokens don’t have basic economics that stimulates the price gain apart from the social media hype.

So, it is a death trap for first-time investors and not too well knowledgeable investors.

Well, are you considering investing in cryptocurrencies and wondering which cryptocurrency to buy now as a beginner?

Maybe Meme tokens had caught your attention, and you are contemplating giving it a shot.

No worries, in this article, I will show you how to discover real 30X gems and how to structure your crypto investment portfolio to limit your risk exposure and long side, get a reasonable return on investment.

As an investor, the first thing to do is to determine the structure of your portfolio and how you can diversify your risk and protect your hard-earned funds.

Survive first before rewards.

Savvy investors like Mark Cuban and institutional investors spread their risks by allocating more funds to blockchain platforms and programmable blockchain platforms.

For instance, a Forbes article says that Mark Cuban owns 30% of his crypto-investments in ETH than other coins.

Likewise, this implies to Jack Dorsey, the former CEO of Twitter.

In October 2020, his financial service company called Block (formally known as Square) invested 50 million dollars (25% of their assets) in Bitcoin.

And he has said that Bitcoin is “probably the best” internet currency.

Another Savvy investor is Michael Saylor, the Founder and CEO of MicroStrategy, an enterprise analytics and mobility Software Company.

The company has invested over 425 million dollars in Bitcoin as a safer alternative to gold and bonds.

If you look at this, there is a pattern.

They invest in blockchain platforms with native coins than blockchain tokens.

However, most retail investors might not have the privilege to access a large amount of money like institutional investors and billionaires investors.

So, the trap that presents an opportunity to maximize their profits becomes so tempting, which is quite unbecoming.

Notwithstanding, you can apply the same logic to investing $1000 and maximize your profits within two years.

To do this, here are the steps to take to discover the coins to buy now as a beginner and allocate your funds wisely.

First step:

Allocate 50% of your funds to programmable blockchain platforms that offer Smart contract Solutions and Decentralized finance such as Ethereum.

For instance, I constructed my portfolio into three pools; I called the first Capstone Pool.

In this Pool, I have these coins: ETH, ADA, DOT, FTM, BTC, BNB, SOL, Algorand, and Avalanche,

The coins in the Pool are equally weighted.

The logic behind this Pool is to have coins that have a sound real-time use case that stimulates the price gains.

Secondly, I considered the security of my funds because these coins have attained a level of security status.

Although, as a retail investor, investing in these coins might not give you huge profits because most of the coins are overpriced.

But you can use Reverse Rebalancing Strategy and Dollar Cost Average to increase your position to gain huge profits.

This way you could earn more with little investment.

To learn more about Reverse Rebalancing, read this article.

Construct another Pool, then allocate 30% of your funds to this Pool.

Conversely, I called this Pool: Long-Term Investment Pool, meaning I will hold the coins for at least one year or more.

In choosing the cryptocurrencies to add to this Pool, you need to pay attention to these factors:

· Market Capitalization

· Circulating Supply

· Trading Volume

· Max Supply

· Adoption Rate

· Audited Source code

· Use cases

· Category Track Record

· The Coin burning mechanism

· Social awareness (Brand Awareness )

· Roadmaps and upcoming events

· Excellent Marketing

· Undervalued projects

· On Chain analysis

· Market Structure

If you understand the interplay of these factors, you can readily discover hidden gems you will invest in that can give you more than 30x ROI within a year.

Price gain and loss is a function of these intricacies unique to the supply and demand of cryptocurrencies.

The logical cynosure is, based on these factors to predict what will probably create scarcity, over-supply, and investors’ apathy or stimulate demands.

To do this is not rocket science all you need is to pay attention to the nuances.

The moment you can piece together these pieces, you will master how to select which coins to buy at any given time.

The first piece we have to start with is the Category Track Record.

Before anything else, you need to identify the best performing categories, which have shown a consistent return for six months.

To do this, you can use either Coinmarket Cap or Coingecko.

Take your time and look at each category listed on the platform and narrow it down to at least six categories that outperform the market.

Sometimes you might only identify just two.

Secondly, there might be overlaps of coins across these categories.

A coin or token may appear in more than two categories.

In my long-term investment Pool, I selected the tokens from these categories:

· Metaverse and NFTs

· Automated Market Maker (DEX and DAO tokens)

· Automated Yield farming

For rationality, I started with “Category Track Record” because it provides the basis for systematic filtering as well it makes the task a little easier.

Your research should be systematic and premised on a rational evaluation of information rather than decision making guided by “noise”.

In the stock market, they do the grouping of assets based on “sector”.

This same applies to cryptocurrency, but they interchange the term sector with category.

So in cryptocurrency, they primarily categorized cryptocurrency based on their use cases and applications, though a cryptocurrency may be grouped in different categories because of other tags associated with the cryptocurrency.

To select these categories; I made my decision based on these factors:

· Adoption rate

· Media attention and social mentions

· Real-time use case

· Recent developments and events

Remember, the goal is to discover tokens that will pump 30x within one year.

Whether stock or cryptocurrency prices rise when buy orders outnumber sell orders, and prices decline when sell orders outnumber buy orders.

Your research as an investor is to see how these factors interplay to stimulate price increase and decreases.

Adoption Rate:

· Can demand be sustained and grow over time?

· are people embracing the solution?

· are people talking about the category?

These are questions you need to answer to know whether people are adopting the solution.

Real-Time use cases:

The keyword here is “Real-Time” not an interesting use case.

Some tokens have interesting use cases but lack critical mass and real commerce.

For instance, if you look at the Logistics category, the category has a strong, interesting use case but lacks critical mass and real commerce.

This explains why Vechain VET regardless of its media coverage, promotion across YouTube channels and market capitalization, yet it still behind most of DeFi and Metaverse tokens, though there are other variables’ that interplay here, we will look into that later.

But keep this at the back of your mind.

Why VET price is still undervalued is because of its circulating supply, which is 64.32 Billion.

Media attention and Social mentions: hype stimulates traders’ and investors’ sentiments towards cryptocurrency.

To measure cryptocurrency awareness, I use these Four tools: Google Trends, Twitter, Lunarcrush and crowdsense.

With these tools, you will make a rational decision based on real-time social insights.

Using these tools, the task is to discover trending cryptocurrencies, then examine if the top three or five three cryptocurrencies fall within the same category.

There are chances if you do the research you will arrive at a similar result, though likely you will see more Meme tokens (shitcoins) than other tokens.

Don’t bother, that is just noise, ignore them and focus more on tokens that have real fundamentals and real commerce.

Recent Developments and Events:

Consider the prospect of the category in the view of ongoing concerns; would the attention be sustained?

Most cryptocurrencies project is typically an experiment. Many don’t have real-world needs perhaps the bubble will burst.

Like the fall of most cities after the gold rush, some tokens, even audited tokens will be delisted from exchanges once their liquidity falls to where the spillage is outrageous.

Immediately, the demand and supply stamina fades, and it will start losing liquidity.

The exchange won’t have any option other than to delist it.

As an investor, you have to examine whether the tokens within the category will experience such fate in near future.

Such a situation opposes greater risk for long-term holders.

For this very reason, you need to study the events, recent development and evolution of the solutions the very category proffers.

Understand: there are several critical reasons you must follow these steps.

First, knowing the category inside and out will help you in navigating and avoiding costly mistakes the first time investors make when investing in cryptocurrencies.

You are like a hunter: your knowledge of every detail of the categories will give you many more options for survival and success.

Remember, your selections for this pool may differ from mine because, during the process, some dynamics might have changed within the cryptocurrency ecosystem.

For instance, NFTs and Metaverse are outperforming DeFi as of the time of writing this article.

Maybe at the time, you are doing your study logistics might have gained traction because of the recent global supply chain challenge.

Okay, now let’s explore how you can select the tokens, some of the variables we employed to identify best performing categories you will combine the variables with these;

• circulating supply
• trading volume
• market capitalization,
• market structure
• On-chain analysis
• Audited Source Code

When you have identified these categories that promise impressive gains, the work is half done.

The next thing to do is to select tokens or coins that fall within these categories that you will invest in.

Depending on your capital, you may opt to invest in 5 or more tokens or coins, the fund allocation might be equally weighted or you can opt for any asset weighting strategy that aligns with your financial goals.

To do the selection, you can use any of these platforms; Coinmarketcap or Coingecko to filter out tokens or coins within the categories.

I use Coinmarketcap a lot to do the filtering and coin selection because I enjoy the user experience, while most of my colleagues prefer Coingecko.

When you create this list, the next thing is to validate and prone the list.

on-chain analysis and technical analysis are the two methods to validate whether a cryptocurrency is good to invest in.

If all the concerns are positive, the cryptocurrencies are good to invest in for the long-term, though I prioritize undervalued cryptocurrencies, over overpriced cryptocurrencies.

I invest in undervalued cryptocurrencies because it will give me a greater return than overpriced cryptocurrencies.

If you don’t have huge capital like from $10,000 upward to invest, maybe you should invest more on undervalued tokens for a better reward.

Okay, let me take you through the thought process.

First, let me explain the terms I mentioned above, then we will discuss their economic implications, safety implications and how they influence the price of a cryptocurrency.

Circulating supply: this means the number of cryptocurrency coins or tokens publicly available in the market.

The circulating supply of a cryptocurrency can increase or decrease because of activities such as; burning, accidental loss of tokens, staking and mining.

The burning of tokens is permanently removing the tokens from circulation.

While mining is the process by which new cryptocurrencies (token or coin) enter circulation, it is also how transactions are confirmed.

Circulating supply should not be confused with total supply and maximum supply.

The Total supply:

is used to quantify the number of coins in existence, i.e. the number of coins that were already issued minus the coins that were burned.

The total supply is the sum of the circulating supply and the coins that are locked up.

The max supply:

is the maximum amount of coins or tokens that will ever exist, including the coins that will be mined or made available in the future.

The network at large does not know how much of the total supply is in active circulation, making the metric of circulating supply an imperfect approximation.

Market Capitalization:

Market capitalization is another metric used to measure a token or coin value.

Market Capitalization does not have a direct impact on the tokens or coin’s price.

Although, it can influence traders’ and investors’ sentiments.

Conversely, market capitalization shows the popularity and growth potential of a cryptocurrency.

I will explain the dynamics later while discussing the economic implications.

Note when the popularity of a cryptocurrency increases, inevitably, the market capitalization will increase because of the inflow of money that goes with the popularity.

Also, the market capitalization could be used as a measure of safety alongside with audit tick (Audited Source Code).

Typically, investors could consider tokens or coins with large capitalization to be a safer investment compared to other tokens or coins.

The market capitalization of a token or coin is:

Market Cap = Price x Circulating Supply.

I need to pigeonhole these variables into three groups and explain each variable based on the grouping. I believe you will easily understand the role each variable plays.

So will see the big picture and how they influence the price of a cryptocurrency.

There are Economic variables; Popularity variables; and Safety variables.

These three variables interplay to determine the price of a cryptocurrency.

• Economic Variables: These are variables that have a direct impact on the price.
• Popularity Variables: These are variables that affect the price by stimulating the traders’ and investors’ sentiments.
• Safety Variables: These are variables that affect the price by boosting the traders’ and investors’ confidence and interest.

Trading volume is a popularity variable, perhaps it doesn’t directly affect the price of cryptocurrencies, but it has an enormous impact on the way the price of cryptocurrencies moves.

Trading Volume: is the total number of units of a cryptocurrency that were traded during a period.

It represents the overall activity of a cryptocurrency asset.

An increase in trading volume shows that the demand for the cryptocurrency is increasing, while if the trading volume is decreasing, it shows that the demand for the cryptocurrency is decreasing.

Prices move in the same direction as trading volume, but there is time this doesn’t hold.

This infraction is called divergence.

It occurs when the price is increasing while the trading volume is decreasing.

The trading volume in cryptocurrency is represented by the dollar volume.

This is calculated:

Dollar volume = Trading volume (units) x Price.

The Trading volume (dollar volume) metrics can determine whether a cryptocurrency has enough liquidity.

Also, it can give you an idea of money flow into an asset.

Conversely, the trading volume represents the interest in the trading activity of a cryptocurrency.

That’s why I categorize it as a popularity variable and safety variable (a measure of confidence).

A rise in volume kicks off significant price increases most times, especially when the price breakout from a strong resistance.

Audit Tick:

This is used to denote that the source code of a token or coin has been audited by an external auditor.

As an investor is advisable to study the source code of the intended project you want to invest in to make such the project have existing blockchain and the code is devoid of any security breaches or violations of programming conventions.

Auditing adds extra safety to cryptocurrency investment.

Notably, if you are a conservative investor that prioritizes risk over reward, this might be something to consider.

For aggressive investors, whether the source code of a project has been audited or not wouldn’t be much of a concern.

Now let’s examine how these variables interplay to give an investor a peek at how to discover tokens and coins to add to this pool.

Our first point of call is circulating supply.

Amongst these variables, circulating supply is the only economic variable.

It influences the price of a cryptocurrency in two ways;

· By inflations: this favour the investors

· By Deflations: while this doesn’t favour the investor

Inflation is a measure of the rate of rising prices of goods and services in an economy.

In an economy, inflation can occur when prices rise because of an increase in production costs, such as raw materials and wages.

A surge in demand for products and services can cause inflation as consumers will pay more for the product.

Unlike in the economy where inflation seems to be a bad omen, but in cryptocurrency is something investors should look out for.

Okay, here is how inflation plays out in cryptocurrencies.

A cryptocurrency with a small circulating supply primarily means there are few tokens available for traders and investors to trade.

Now, think through this; let your imagination runs wild.

Example of Tokens with small Circulation

I would like you to complete this list. Go to Coinmarketcap, use the filter feature and filter coins with a circulating supply ranging from 10000 to 50,000,000.

Then look at their historical price data.

In cryptocurrency, inflation occurs when the trading volume (volume of money) exceeds the circulating supply.

Although, there’s infraction because of trader’s psychology and market sentiment.

Market sentiment and traders psychology is a decisive factor you shouldn’t ignore.

A coin or token with considerable popularity and small circulating supply such as the ones I listed above and the ones you will discover.

Such cryptocurrencies are prone to experience parabolic price moves.

A continuing rise in traders’ interest will increase the volume of money inflow into the coins or tokens as these activities build up.

There’s a tendency that it will trigger FOMO, which induces inflation the moment the volume of money exceeds the circulating supply.

The coin will experience a parabolic price move, which will probably be sustained for a year or more, though will be weekly consolidation.

But mostly, the parabolic price move weakens when the coin interest and popularity water down like what’s happening with most of the DeFi tokens.

Money is flowing out of the DeFi ecosystem into Metaverse, which now is more popular than DeFi.

This doesn’t mean the DeFi ecosystem is dead, no!

It is much more alive, but the DeFi tokens that will sustain their price amidst Metaverse reign are the ones that have high adoption and small circulating supply.

As transaction occurs within their ecosystem with or without traders’ sentiments, the price of the coins will always increase over time because of the pure factor of supply and demand.

Now, let’s look at how excessive circulating supply affects the price increase.

Any cryptocurrency that has a circulating supply from one billion above without a strong real-time use case, high adoption rate and sound burning mechanism lack pure economics.

It will be at the mercy of hype and popularity.

It gets messy if the coin doesn’t have a built-in periodic burning mechanism that constantly reduces the supply through the burning of the cryptocurrency.

Such cryptocurrencies will probably suffer deflation after 6 months or six months of listing them on major centralized exchanges like Binance, Kucoin and Coinbase.

Deflation is the decline of the price level.

In cryptocurrency, it is usually associated with a contraction of the trading volume (inflow of money), increasing outflow of money and excessive supply of the tokens or coins.

Over time, if the deflation continues due to declining popularity and interest, the token might even be delisted from exchanges.

Also, tokens with excessive circulating supply and weakening popularity have a low recovery rate.

After a dip (hard market correction), the price of such coins tends not to recover quickly like coins with a small circulating supply.

Another way circulating supply influences the price is through market capitalization.

The market capitalization of a cryptocurrency can tell a lot about the cryptocurrency, through it you can make educated assumptions about the potential growth of a cryptocurrency.

Like most of the Meme coins like Shiba Inu and shitcoins like Safemoon, Wakanda Inu, etc that people think will make them a billionaire when the price gets to one dollar.

Such a reality is improbable with cryptocurrency, with an excessive circulating supply that runs into billions.

Except the coin has a sound built-in burning mechanism that is true to its design.

To learn more about how this plays out, read this article by Randerson “SHIB Price Prediction & Analysis: Can Shibu-Inu Token Reach $1.00, $0.10, or $0.01?

In the article, Randerson explains how an investor can make educated assumptions about the potential price increase of a cryptocurrency with its circulating supply and market capitalization.

When a cryptocurrency market capitalization falls, it implies investors are losing interest in the coin.

And the popularity is weakening.

Falling trading volume validates this.

If this continues, the price will deflate drastically.

Low trading volume implies low activity or lack of interest of investors and traders.

Cryptocurrency with low trading volume is, extremely speculative and unpredictable; the cryptocurrency on the exchange will have a wide bid spread because of its’ low liquidity.

And it will be prone to outrageous, spillage and whale manipulations.

A large purchase or sale by a whale can easily cause a drastic spike in the price or hard dump in the price.

Collectively, if you piece together these variables alongside factoring value investing into the mix, you stand a good chance of discovering monumental projects that will be 30x in a year.

After allocating funds for the long term investment; you need to create another pool to capture short-term gains in projects that don’t make convincible sense because of their circulating supply.

Cryptocurrencies such as; Meme coins, shitcoins and Smart contract tokens that their circulating supply is over a billion.

To construct this Pool, allocate 20% of the remaining fund to the Pool.

Here, the intention is to capture the “Sensation Gains” and exit as quickly as possible.

Sensation gains rise owing to;

· A widespread reaction of interest and excitement because of a cryptocurrency promotion by Twitter and YouTube influencers.

· Also, coin listing on cryptocurrency centralized exchanges can create this opportunity.

To learn more about how to capture a sizable profit on Binance or Coinbase’s new coin listing, read this article.

Critical success factors to know the best cryptocurrencies to buy and add to this Pool are patience, early discovery and timing.

So you need to design a system that will enable you to discover tokens early before the sensation peak.

To learn how to design a cryptocurrency investment system, enroll and take this course: click here to enroll.

The simplest method to discover these tokens is to pay attention closely to the Binance coin listing.

When Binance list a cryptocurrency that its’ circulating supply exceeded 500 million.

I will keep a tab on the token to buy it when it retraces.

After a day of the listing, I will look at the trading volume and the percentage of the price surge.

Conversely, if the token surged over 500%, this is the first criteria.

Next, I look at the trading volume if the volume of money inflow is overwhelming.

I will wait for the price to correct and move into the consolidation stage and establish a strong support level through two multiple tests of the support level.

At this, point the token has established a demand zone.

So, I will buy the coin at the demand zone.

Typically, I set 250% gain as my exit percentage threshold for the project.

So, if you invest $500 in the token, you stand the chance of making $1,250 in profit.

Sometimes, it will take two or three months before the price target will hit.

Check out these tokens C96, Gala, and Shiba Inu Etc.

These tokens made over 250% profit when they bounced back.

After the price bounces, I will exit my position.

Even though sometimes I will hold the token, but I will use Reverse rebalancing to take my profit and de-risk my exposure.

Conclusion:

Cryptocurrency value is a measure of confidence as long as people believe in it, it will exist.

Since cryptocurrency existence is centred on people’s emotions; market sentiment and psychology will be the core determinant of the value of cryptocurrencies aside from supply and demand.

I hope the article is helpful?

However, there’s a need to learn about On-chain analysis and Technical analysis. The knowledge will help you make a much better decision.

And, also you need structured learning to master the act of discovering tokens that will 30x in a year.

If you are interested in acquiring structured learning, enroll in our Online Advance Crypto Trading and Investment Masterclass. Click here to enroll.

If you have questions, please drop them in the comment box below.