Cryptocurrencies are a hot topic in finance, grabbing the attention of both seasoned investors and those after quick gains. Tech enthusiasts and early adopters made big profits in the past, becoming millionaires.
Can you still get rich with crypto? Many ask which crypto is the key as the market changes. This guide is for crypto beginners seeking substantial returns.
Learn the basics to make informed decisions: market cap, liquidity, token economies, development teams, and community support. PlasBit’s guide empowers you with the knowledge for smart investments.
Demystify trading strategies like scalping, day trading, range trading, intraday trading, swing trading, and position trading for profit.
Comprehensive Analysis for Informed Decision-Making
Assessing cryptos for high returns requires analyzing key metrics to understand market dynamics and long-term potential.
We’ll delve into parameters guiding savvy investors toward cryptos with significant growth potential and optimal returns.
Market Capitalization: A Key Metric of Crypto Market
Market capitalization is calculated by multiplying the current price by the total circulating supply. It reflects the total invested value in a cryptocurrency.
High market capitalization suggests wide adoption and less volatility, making it suitable for long-term investors.
However, it may limit growth as mature markets tend to be more stable. This stability reduces volatility but also profit potential for risk-averse investors.
Investors should choose high or low-capitalization cryptos based on their type, investment amount, time frame, and risk tolerance.
Trading Volume: How Much Money is Being Traded Today?
Trading volume matters. It shows the money flowing in and out of the market. This is crucial for market liquidity.
It’s an index reflecting investor activity. Low volume means big buys or sells can shake the market a lot.
High volume, seen in Bitcoin, means stability. More volume equals less impact from big trades.
Liquidity: Navigating the Crypto Seas with Ease
Market liquidity, also associated with trading volume, is the ease with which a cryptocurrency can be sold.
Simply put, it is the quantity and depth of buy and sell orders in the order book. Low liquidity causes slippage, meaning that, for example, to execute an instant buy order (at market) at $10 for a given cryptocurrency, the trade is made at $10.5 because the first sell order is at that price. Consequently, there is a ‘spread’ between buy and sell orders in a low liquidity market.
Tokenomics: Economy of the Crypto Ecosystem
Tokenomics matters and is usually in a crypto’s whitepaper. It’s the internal economy, crucial for reliability.
Assessing a project means diving into its tech and economic mechanisms. Tokenomics, often explained with diagrams, details supply, burning, staking, rewards, and profits.
A good analysis can reveal scams or weak projects. It’s essential to avoid scams and make informed investments in promising ventures.
Team: A Crucial Factor in Evaluation
Team analysis is crucial to grasp a project’s potential. Audit teams check founders’ backgrounds for a realistic view of capabilities and experience.
A strong development team signals potential success, but risks exist with key-person dependency. Diverse skills in the team help mitigate this.
Evaluating adaptability to tech and market trends reveals the project’s resilience.
Community Support: The Heart of Web3
Understanding Web3 is vital for many projects. Communities are key in this revolution. Blockchain and Web3 thrive on network transparency and integrity, ideal for innovative communities and DAOs. Healthy and innovative communities support crypto projects.
They offer moral support, visibility, facilitate adoption, and contribute to long-term growth. Communities also provide feedback for user-friendly applications.
Evaluating these metrics alone isn’t enough. Considering them along with other trading factors leads to informed choices and lowers the risk of losing money. Yet, investors should be aware of unconscious biases.
Confirmation bias, for instance, can lead to errors and misinterpretations. Adopt critical thinking to avoid falling victim to unconscious biases.
Which Crypto Will Make You Rich? The Top 5 Promising Cryptocurrencies
Some of the many available cryptocurrencies have stood out for their widespread adoption, innovative technology, and growth potential. We will delve deep into the top 5 promising cryptocurrencies in 2024 that could contribute to wealth accumulation in the long run.
1. Bitcoin (BTC)
Bitcoin, introduced in 2009 by an individual or group under the pseudonym Satoshi Nakamoto, is the first and most well-known cryptocurrency. Often referred to as digital gold and a store of value, Bitcoin’s limited supply of 21 million coins has fueled increasing demand, and institutional adoption is steadily growing.
Bitcoin’s Statistics and Price
Bitcoin currently trades at $42,680 with a market cap of $837 billion. Experts predict it could surpass $100,000 in five years due to scarcity and institutional adoption.
Some analysts believe long-term value could exceed $1,000,000, especially if it replaces traditional store-of-value reserves.
If Bitcoin reaches gold’s $12 trillion market cap, a single Bitcoin could surpass $650,000, transforming its value over the next decade.
Increased institutional acceptance and Bitcoin as a digital gold equivalent contribute to its appeal as an investment.
Key Points on Bitcoin
- Scarcity: With a maximum supply of 21 million, Bitcoin is designed to be deflationary, potentially increasing its value over time. The growth possibilities are even more significant considering the progressively reduced emissions through the Halvings.
- Institutional Adoption: The first Bitcoin ETFs were approved in January 2024. Major financial institutions are beginning to embrace Bitcoin as an investment.
- Security: The Bitcoin network is renowned for its security, decentralization, and resistance to manipulation.
2. Ethereum (ETH)
Ethereum is a decentralized platform enabling the development of smart contracts and decentralized applications (DApps). It is often dubbed the “world computer” because it can execute self-executing code on a blockchain.
Ethereum’s Statistics and Price
With a current price of $2,294 and a market capitalization of $275 billion, Ethereum is at the forefront of blockchain innovation. Implementing Ethereum 2.0 improved scalability and sustainability, positively impacting its intrinsic value. Analysts estimate that Ethereum could exceed $5,000 in the next five years, mainly due to the growing adoption of smart contracts and the expansion of the DeFi and NFT sectors.
Key Points on Ethereum
- Smart Contracts: Ethereum introduced the concept of smart contracts, allowing for autonomous transactions without intermediaries.
- DeFi and NFTs: The growth of Decentralized Finance (DeFi) and Non-Fungible Tokens (NFTs) has been primarily driven by Ethereum.
- Evolution: Ethereum is undergoing a significant technological upgrade called Ethereum 2.0, which aims to improve scalability and network sustainability.
3. Solana (SOL)
Solana is a blockchain designed to ensure fast and low-cost transactions. Its innovative architecture and scalability approach have made it one of the most promising cryptocurrencies.
Solana’s Statistics and Price
Solana has shown remarkable growth, with a current price of $96 and a market capitalization of $42 billion. With its transaction speed and the increasing adoption of Solana-based projects, some experts believe the price could reach $300 within five years. In the long term, if the blockchain maintains its competitiveness, the value of Solana could surpass expectations, influenced by its adoption in sectors such as decentralized finance and blockchain gaming.
Key Points on Solana
- Speed and Scalability: Solana can handle many transactions per second (TPS), surpassing many other blockchains.
- Growing Ecosystem: Solana has witnessed rapid ecosystem growth, with numerous projects and applications built on its blockchain.
- Delegated Proof-of-Stake (DPoS): Its DPoS consensus algorithm contributes to operational efficiency.
4. Chainlink (LINK)
Chainlink is a platform that connects smart contracts with real-world data sources, creating a crucial bridge between the blockchain and the external world.
Chainlink’s Statistics and Price
With a current price of $16.7 and a market capitalization of $9.5 billion, Chainlink is crucial in connecting smart contracts with real-world data. The price could significantly increase in response to new partnerships and blockchain integrations in the short term. In the long term, with the growth of the smart contract ecosystem, the price of Chainlink could exceed $50 in the next five years.
Key Points on Chainlink
- Oracle Network: Chainlink provides reliable data through its Oracle network, enhancing the trustworthiness of smart contracts.
- Interoperability: Its ability to integrate with various blockchains makes interoperability within the blockchain ecosystem crucial.
- Partnerships: Chainlink has established numerous partnerships with blockchain companies and projects, solidifying its position in the industry.
5. Tron (TRX)
Tron is a blockchain platform focusing on digital content sharing and entertainment, aiming to decentralize the online entertainment industry.
Tron’s Statistics and Price
Currently trading at $0.11 with a market capitalization of $10.1 billion, Tron (TRX) focuses on decentralizing digital entertainment. In the short term, ecosystem growth and strategic partnerships could influence Tron’s price. In the long term, if it positions itself as a decentralized online entertainment industry leader, Tron’s price could exceed $0.50 in the next five years.
Key Points on Tron
- Digital Content: Tron aims to decentralize digital content distribution, eliminating intermediaries and reducing costs.
- BitTorrent Integration: Tron acquired BitTorrent, making the platform integral to peer-to-peer file sharing.
- Transaction Speed: Tron offers fast and low-cost transactions, enhancing user experience in the digital entertainment realm.
In conclusion, cryptocurrencies offer various earning opportunities, such as through trading, hodling, giveaways, cryptovouchers, staking, and so on, but it’s crucial to remember their high volatility. Before investing, thorough research and assessing one’s risk appetite are advisable. Each of these top 5 cryptocurrencies presents unique features and potential, making them worth considering in a diversified investment strategy.
Trading Strategies Guide to Try to Grow Your Wealth
We will explore trading strategies that delineate distinctive approaches through which investors seek to capitalize on asset price fluctuations.
From the rapid-fire world of scalping, characterized by quick intraday movements, to the more contemplative position trading, focused on long-term perspectives, each strategy reflects a combination of technical and fundamental analysis and a touch of intuition.
Navigating through this crypto trading strategy requires technical expertise, discipline, planning, and the ability to dynamically adapt to ever-changing market conditions.
Scalping Trading
Scalping is a difficult trading art that demands skill and quick decision-making. It’s a short-term strategy in which traders seize small price movements within the financial markets.
Scalpers often use bots and automation that rely on technical indicators like moving averages, Bollinger Bands, and oscillators to swiftly pinpoint entry and exit points.
Is Scalping Trading Easy?
New traders find scalping challenging due to the need for recognizing support/resistance, monitoring economic events, and liquidity concerns, especially with low-cap cryptocurrencies.
High volatility with leverage can lead to significant losses. Choose liquid instruments, set stop-losses, and establish a detailed trading plan with clear profit targets and discipline to avoid impulsive decisions.
Day Trading
Day trading is a trading strategy where traders open and close positions within the same trading day.
Traders who use this strategy aim to make profits from daily price movements. Day trading can be very profitable in the long term due to compound interest, even if the percentage of profit is small.
To mitigate the risk of overnight market movements, all positions must be closed before the day ends.
Technical analysis is the primary tool used by day traders to make quick and informed decisions. High-risk day traders often use margin and leverage to increase their profits.
How Can I Start with Day Trading?
Before starting your day trading journey, be sure to understand the Web3 ecosystem and the technology of the cryptocurrency.
Additionally, analyze news and data before the market opens and limit the amount invested in each trade to spread the risk across a larger number of assets.
Keep a constant eye on the portfolio and markets.
Range Trading
Range trading is a strategy centered around identifying a price range within which an asset moves laterally.
Technical indicators are crucial for this strategy because range traders use support and resistance levels to pinpoint the price range.
By placing limit orders near the boundaries of the range, this kind of trader tries to earn through price bounces between supports and resistance.
Starting Range Trading
To trade cryptocurrency successfully, you must first understand the market dynamics and cycles, including all the complex factors that contribute to price swings.
Next, analyze price behavior near support and resistance levels to define your trading range.
It’s important to set disciplined stop-loss and take-profit levels, relying on rationality rather than emotions.
By doing so, you can take profit and avoid loss mathematically, without feeling rushed or anxious.
Intraday Trading
Intraday trading refers to transactions occurring within the day, but unlike day trading, they can last only a few minutes.
It also includes exchanging crypto-to-crypto to capitalize on arbitrage opportunities in crypto.
In this trading method, intraday traders exploit market liquidity during trading sessions and capture short-term profit opportunities in crypto.
What are the Characteristics of Intraday Trading?
These traders use and rely on advanced technical indicators to confirm entry signals and close positions until the price reaches a specific take-profit target.
To minimize loss, avoid investing too much in a single trade, diversify across more assets, and set strategic stop-losses and take-profits, without being involved emotionally.
Swing Trading
Swing trading is focused on seizing price fluctuations occurring within days or weeks.
Traders employing this strategy actively scout for potential shifts in the medium-term direction of cryptocurrencies.
This approach places emphasis on both technical analysis and fundamental aspects of the asset.
Recognizing key price patterns is crucial in pinpointing moments when a cryptocurrency is poised for a directional change.
Among the widely acknowledged patterns are head and shoulders or double bottoms.
Risk Minimization Strategies in Swing Trading
Identifying the correct short-term price movements is not easy. Be aware of confirming your hypothesis without a critical thinking analysis and be conscious of your involuntary cognition bias.
Additionally, keep in mind that some unpredictable events, like black swans, can lead to rapid and substantial changes. Adopt strategies, such as stopping losses to prevent large sudden losses.
Position Trading
Position trading is a long-term approach based on fundamental analysis and trend investing. It involves keeping the cryptocurrency for a long time without selling, believing in substantial growth in the long term.
This is the easier trading strategy because the risk of irrational actions and panic is limited.
These investors usually have a wireframe of years. In this context, PlasBit advises long-term holders to keep their crypto in cold wallets for increased security.
How do I Optimize my Long-Term Position Trading Strategy?
Prioritize risk mitigation for a robust long-term strategy. Opt for a diversified crypto portfolio to minimize risks, acknowledging that Bitcoin, with its higher market cap and trading volume, is less prone to abrupt price swings.
Explore investment in a crypto-basket or index fund for exposure to multiple cryptocurrencies through a single investment.
Conduct thorough research, staying updated on assets and market conditions, and adjust strategies accordingly.
Tailor your approach based on your trading style, financial goals, and risk tolerance. Success in trading requires consistent practice, continuous learning, and disciplined execution.
Risks of Crypto Trading and Retail Investor Statistics
While the allure of quick profits has drawn many into crypto trading, it is crucial to understand and appreciate the inherent risks associated with this volatile market.
Volatility and Price Fluctuations
One of the most prominent risks in crypto trading strategy is the extreme volatility of cryptocurrency prices.
Unlike traditional financial markets, where price swings are generally more moderate, cryptocurrency can experience drastic fluctuations within short time frames.
Sudden and unpredictable price movements can lead to substantial losses for traders, especially those not equipped to react swiftly to market changes.
Lack of Regulation
Another significant risk factor is the need for comprehensive regulation in the cryptocurrency space.
While efforts are underway to establish regulatory frameworks, the decentralized nature of many cryptocurrencies and the global nature of the market make it challenging to enforce consistent regulations.
This lack of oversight exposes traders to potential fraud, market manipulation, and other illicit activities.
Security Concerns
Security is a paramount concern in the crypto world. Hacking and unauthorized access to cryptocurrency exchanges have led to substantial investor losses.
Despite advancements in security measures, blockchain technology’s decentralized and pseudonymous nature makes it an attractive target for cybercriminals.
Often lacking sophisticated security measures, retail investors can become victims of theft or fraud.
Leverage and Margin Trading
Many crypto exchanges offer the option of trading with leverage, allowing investors to control larger positions with relatively little capital.
While this can amplify profits, it also magnifies losses. Inexperienced retail traders who engage in leveraged trading may find themselves in positions where a slight market movement can wipe out their entire investment.
Retail Investor Statistics
Examining the statistics surrounding retail investors in the crypto market is essential. Numerous studies suggest that many retail traders experience losses rather than gains.
It is crucial for aspiring traders to approach cryptocurrency trading with a clear understanding of the risks involved and to adopt risk management strategies to mitigate potential losses.
Crypto trading offers exciting opportunities but comes with inherent risks that demand careful consideration.
Retail investors should educate themselves, stay informed about market trends, and cautiously approach trading.
Unlocking Opportunities in Cryptocurrency: Informed Decision-Making
Cryptocurrencies have demonstrated their ability to deliver substantial returns, with certain assets experiencing remarkable appreciation over relatively short periods.
The decentralized nature of many cryptocurrencies and their potential to revolutionize various industries contribute to the allure of participating in this dynamic market.
Read more: What is Kava Crypto?
Risk: A Constant Companion
Yet, among the promise of profits, the risks are omnipresent. Volatility, regulatory uncertainties, security concerns, and the lure of leveraging can expose investors to significant downsides.
Recognizing and managing these risks is paramount for anyone navigating the crypto ecosystem.
Risk Management Strategies
Successful cryptocurrency investors often attribute their achievements to effective risk management strategies.
Choosing secure crypto exchanges, diversifying portfolios, setting clear investment goals, and employing prudent risk-reward ratios are crucial in mitigating potential losses.
Understanding the risk-return tradeoff is the cornerstone of a resilient investment strategy.
Knowledge as a Key to Success
In the fast-paced world of cryptocurrencies, staying well-informed is a powerful tool.
The landscape evolves rapidly, and being aware of market trends, technological developments, and regulatory changes empowers investors to make informed decisions.
The adage “knowledge is power” holds particularly true in crypto, where timely and accurate information can differentiate between success and setbacks.