How to Identify Top Performing Cryptocurrencies for Investment

Kiana Danial  |


In previous educational pieces, I talk about methods to identify different crypto categories and how to manage your crypto risk. But going through thousands of cryptocurrencies in order to find the best-performing ones is not a piece of cake. As I explain in my book, Cryptocurrency Investing for Dummies, I normally use the IDDA strategy development method for my portfolio management. The first point of the IDDA is fundamental analysis. Let’s take a closer look at what you need to watch out for when conducting fundamental analysis on cryptocurrencies.

Identifying Top Performing Cryptocurrencies

Finding the right crypto category is like picking “the one” when dating. Except, in this case, you should NOT be thinking with your you-know-what. You should most certainly think with your brain. And maybe a little bit your gut feeling. But nothing more than that. Here are some methods you can use to cherry pick the best cryptos for your investment portfolio.

1-Go with What you Know

This is a golden, yet simple method also used in the stock market. If you already have been exposed to certain types of cryptocurrencies, or better yet, have already used them in real life and have liked their performance, consider adding them to your portfolio. In the stock market, for example, many newbie investors make several profitable investments by simply observing their own buying habits. If they prefer to buy from healthier “fast-food” services like Chipotle  (CMG) instead of McDonald’s  (MCD), they might consider adding CMG to their portfolio.

A similar method can be used when identifying the top performing cryptocurrencies. If you notice that your favorite online store has already added a cryptocurrency payment option to their checkout page, you’ve tried it out and placed your order smoothly, you may assume the trading volume for that cryptocurrency could increase in the future. So it could become a valuable asset to add to your portfolio.

2- Pick the Right Category

Towards the end of Chapter 8 of Cryptocurrency Investing for Dummies, I talk a huge deal about crypto categories and where you can find them. Certain categories perform better at certain times in the overall market, not just cryptos. So, for example, if you notice that fintech sector is heading higher in equities and that everyone is talking about artificial intelligence (AI,) you might want to consider browsing through the AI category and find cryptocurrencies that are involved with it.

Another way to pick the best categories for medium-term investments is to choose from categories that are already outperforming the overall market. I’m not talking about a category that did well just today. But something that either has been doing well or is showing signs of picking up. You can pick the hottest category as your top pick and then add on the second and third ones for diversification purposes. I talk more about diversification in Chapter 10 of Cryptocurrency Investing for Dummies. For more up-to-date information on hottest cryptocurrency categories and top performing cryptocurrencies, please visit our investment group: https://education.investdiva.com/join-group

One thing to remember is that the cryptocurrency categories may not always follow the rest of the market. Since this is a very new industry, you might find opportunities here that you might not necessarily find in the more traditional equities market. Heck, the crypto industry could turn into the “safety” net when the stock market crashes.

3- Check out Their Website

The third steps to take when conducting fundamental analysis in order to find the top performing cryptocurrencies is to go directly to their website. Whether you have a number of cryptocurrencies in mind based on your own experience, or you’ve picked a category and now want to choose the best crypto within that sector, you must now start a more detailed analysis on your finalists. If you’ve ever watched The Bachelor or The Bachelorette (guilty as charged, I’m addicted to the reality TV show) you already should be familiar with the process. You start out with around 30 potential matches for your portfolio. By the time you’re down to the 3-4 finalists, you’re ready to go to their hometowns and see what their world is all about.

In the cryptocurrency world, the hometown is their company’s website. But you won’t be meeting their aunts and uncles and going to their high school. Instead, here are a few “dating” ideas when you’re picking your crypto sweetheart. Check out Cryptocurrency Investing for Dummies for more.

  • Flip through their White Paper
  • Identify their team
  • Browse their partnerships
  • Get familiar with their technology
  • Check out their part in the society
  • Analyze their roadmap
  • Get involved

Once you’ve done the essential background check on your prospect cryptocurrencies, you can move on to the next points of IDDA, such as sentimental Analysis and technical analysis. Join our investing group to get the latest investing strategies using these categories, stop-loss, take-profit and other limit order ideas on cryptocurrencies, forex and stocks. Our comprehensive signals will help you create a unique strategy for you, according to your risk tolerance.

As the 4th point of the IDDA technique, you must calculate your risk tolerance before deciding on the investment strategy that is suitable for your portfolio.

Don’t forget to complete your risk management due-diligence before developing your investment strategy.


Invest responsibly,

Kiana

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
CMG Chipotle Mexican Grill Inc. 492.04 3.72 0.76 190,233 Trade
MCD McDonald's Corporation 157.85 -0.29 -0.18 1,011,857 Trade

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