By February 13, the total capitalization of the crypto market increased by $17.6 billion in 24 hours, and the rate of the world's first cryptocurrency rose by more than 10% to $8,759. According to experts, other cryptocurrencies will follow Bitcoin’s example, bringing about the end of the bearish cycle, and investors will return to the crypto market. We examined several cryptocurrencies, which, according to analysts, will bring high profits in the long term.
Advantages of “Long” Investing: How to Determine Promising Cryptocurrencies
Each crypto trader chooses the most profitable and suitable strategy. Experienced crypto investors, however, warn traders against participation in short selling at this stage of market development, due to potentially high risks. In their opinion, the best strategy now is investing in long positions for a long period.
Unlike day traders, who conduct transactions with cryptocurrencies within a single trading session, investors who prefer to invest long are subject to fewer risks and are not under such high stress and pay less commission fees. In order to combat the high volatility of the cryptocurrency market, experienced traders use the DСA method (dollar-cost averaging), which allows them to increase their portfolio by investing a fixed amount in dollars at regular intervals.
In order to determine the value of a cryptocurrency and its prospects, analysts consider the following factors:
Market share. The share of each cryptocurrency on the market can be calculated by comparing its market capitalization to the total market cap. The larger the share, the stronger the position of the cryptocurrency on the market. For example, to date, the market capitalization of Bitcoin is more than one-third of the total cap, standing at 34.9%. This ratio can be used as an indicator of the long-term viability of a cryptocurrency in a portfolio.
Value of utility. To objectively assess the potential of any cryptocurrency, one needs to know the answers to the following questions: what is the practical value of the coin? Does it have a market and users? This is important since it is possible to understand which cryptocurrencies can become universally accepted. For example, one of the key benefits of Ether and the Ethereum blockchain is the ability to develop and implement decentralized applications (DApps). As long as developers are choosing this particular blockchain to run their DApps, the overall utility of Ether will not only be stable but could even grow with time.
The volume of transactions. The daily volume of transactions shows how much the cryptocurrency is in demand among market participants. For example, at the moment, about 195,115 transactions are taking place on Bitcoin per day, 799,836 on Ether, and 809,646 on Ripple. This indicator usually grows with the development of the cryptocurrency, which makes it a promising long-term asset in a portfolio.
Liquidity. High liquidity, as well as the volume of transactions, shows how much the cryptocurrency is in demand on the market. Moreover, these two indicators are interrelated. Liquidity is defined as the ability of assets to be quickly sold at a price close to the market price. Low liquidity leads to high volatility, which causes a large and palpable price change on the market. At the same time, higher liquidity creates a less volatile market, and cryptocurrency rates do not change significantly as a result.
Development of technology. This, perhaps, is a key aspect of any cryptocurrency. If the technology on which the cryptocurrency is based cannot fulfill the goals set for it, then, in the long term, this coin will not survive. For example, the Ethereum network served as the basis for the Byzantium hard fork, which is the first part of a massive upgrade of Metropolis aimed at optimizing the network. Thanks to the hard fork, Ethereum now has faster processing of transactions, but at the same time, the reward per block is reduced from 5 to 3 Ether.
Market news. The news background surrounding any cryptocurrency can significantly affect the growth or fall of its price, as well as the long-term viability and the size of the investor's portfolio. In this regard, it is important not only to follow the news but also be ready to respond to them promptly.
Cryptocurrencies In The Long Run
When choosing a cryptocurrency for a long-term investment, in addition to conducting analysis, it is also worth familiarizing with cryptocurrency indexes. They will help form an idea of the general dynamics of quotations of the currency and investor sentiment. To date, cryptocurrency indexes such as CRIX, HOLD 10, and CAMCrypto30 are available on the market, as well as two cryptocurrencies and tokens indexes of DeCenter—the DCI and DCI50—which are rebalanced on a quarterly basis. The DCI includes ten cryptocurrencies and tokens with the highest capitalization, while DCI50, also known as the Altcoin Index, includes 50 cryptocurrencies other than Bitcoin.
The most reliable and promising cryptocurrencies in 2018:
The second cryptocurrency by market capitalization differs from Bitcoin primarily in its purpose. Bitcoin is a means of storing and accumulating capital, while Ether is created for work on the Ethereum network, in which users have access to working with smart contracts and developing DApps. Also, the cryptocurrency is in partnership with one of the largest non-for-profit alliances, the Enterprise Ethereum Alliance, consisting of financial and technology companies and funds, including the Russian Sberbank. According to investors, the Ether rate this year will overcome the $2,000 mark and during 2018 will lean closer to $5,000.
Market capitalization: $81.7 billion
Daily trading volume: $2.2 billion
Growth rate for the year: $11−$838
Circulating supply: 97,585,773
If Bitcoin is digital gold of the crypto market, and Ether is digital oil, then Litecoin is digital silver. The coin that appeared as a result of the Bitcoin network's hard fork was founded by the famous developer Charlie Lee as a way to solve the problems existing in Bitcoin. Since its inception, Litecoin has had a higher transaction confirmation rate, lower transaction fees, and increased storage efficiency. In 2018, the Litecoin team has many plans, for example, the creation of new payment services LitePay and LitePal. According to investors, before the end of the year, the Litecoin rate will reach the level of $1,000 per coin.
Market capitalization: $8.5 billion
Daily trading volume: $519.6 million
Growth rate for the year: $3.72−$159
Max supply: 84 million
The Monero cryptocurrency was introduced in 2014 as a result of the Bytecoin hard fork. The main advantage of Monero is that it is a secure, untraceable, and anonymous cryptocurrency, which ensures complete privacy for users. This is possible by using the CryptoNote protocol, which is based on ring signatures. In 2017, the cryptocurrency was included in the top ten in terms of market capitalization. Among Monero critics, however, it is widely believed that this cryptocurrency is popular on the black market as it and other anonymous cryptocurrencies are used for the sale and purchase of drugs and weapons. According to investors, the Monero rate will fluctuate between $470 and $530 by the end of 2018.
Market capitalization: $3.6 billion
Daily trading volume: $42.7 million
Growth rate for the year: $12.2−$230.5
Circulating supply: 15,716,443
The Ripple protocol was launched in 2012 in China as a global system of mutual settlements in real time, allowing for money transfers and currency exchange. The goal of Ripple is to provide instant and secure financial operations around the world. Thus, Ripple becomes the main competitor of SWIFT or Western Union. As for the cryptocurrency of the Ripple, it exists to maintain the platform and allows anyone to conduct financial transactions and exchange any other currencies. Experts predict that in 2018 Ripple will become the preferred cryptocurrency for conducting banking transactions around the world, and the rate will vary between $5 and $7.
Market capitalization: $41.6 billion
Daily trading volume: $1.2 billion
Growth rate for the year: $0.006−$1.03
Max supply: 100 billion
The NEO cryptocurrency is much like Ether, but many analysts are sure that NEO will become the platform for a future decentralized economy. Launched in China in 2014, the NEO non-for-profit blockchain project is aimed at developing a decentralized "smart economy" designed to create and manage digital assets through smart contracts. The project is partnered with companies such as Microsoft China, Hyperledger, and Alibaba. Also, the Chinese government is interested in introducing public digital identification services developed within the framework of the project. Experts are sure that in 2018 the project will continue to develop, in connection with which the value of its native cryptocurrency will grow, the rate of which by the end of the year will be between $200 and $250.
Market capitalization: $7.1 billion
Daily trading volume: $192 million
Growth rate for the year: $0.12−$109.57
Total supply: 100 million
Stellar Lumens XLM
The cryptocurrency of the Stellar Lumens platform is heralded by experts as one of the most promising to date. In 2014, co-founder of Ripple Jed McCaleb, along with Joyce Kim, launched Stellar as an offshoot of the Ripple network. The Stellar platform provides real-time currency transactions. From the very beginning, the developers of the project noted that one of their goals was to adhere to the principle of maximum transparency. The developments of the project have attracted the interest of such companies as Deloitte and IBM, and organizers of ICOs are beginning to transfer crowdsales to the Stellar platform. According to forecasts of analysts, in 2018 the XLM will overcome the mark of $1.00 and will grow to a value of $1.25.
Market capitalization: $7 billion
Daily trading volume: $60 million
Growth rate for the year: $0.0021−$0.37
Total supply: 103,689,123,972
The relatively young NEM cryptocurrency blockchain platform (New Economy Movement) confidently holds its position in the top twenty by market capitalization. Platform users have access to an encrypted messaging system and multi-signature accounts. The Eigentrust++ reputation system also works on the same platform. The NEM software was used in the open Mainet blockchain network, and the commercial Mijin blockchain network is being tested by financial institutions and private companies in Japan. The COMSA platform, which allows users to hold their ICOs, is also based on the NEM platform. Analysts predict rapid growth and development of not only the NEM platform but also its native digital token XEM.
Market capitalization: $4.9 billion
Daily trading volume: $30 million
Growth rate for the year: $0.0066−$0.55
Circulating supply: 8,999,999,999