It’s no surprise to anyone who’s up-to-date on the financial markets that cryptocurrency is the new “big thing” with investors. For good reasons, too. Financial and business ideas are well-suited to the blockchain, and cryptocurrency is how they absorb value. Countless businesses, financial organizations, and applications are built on blockchain, and pinpointing the cryptocurrencies that act as foundation to this innovative decentralized environment allows one to take advantage of its overall growth.
The market capitalization of blockchain is measurable through the amount of fiat money invested into its many cryptocurrencies, and therefore the services funded by them. Since the invention of the grandfather cryptocurrency Bitcoin in 2009, this new market reached $8 billion in 2016, $25 billion by 2017, and $135 billion by 2018. For fresh and veteran cryptocurrency investors alike, the best cryptocurrencies to trade are simple to identify.
Factors to Focus on for Crypto Traders
If a cryptocurrency satisfies all four of the criteria below, then it exhibits longevity, making it a solid trading option.
- Statistical Significance
Traders will appreciate cryptocurrencies that have high daily volume, which also usually means a larger market capitalization and a presence on many cryptocurrency exchanges. This is beneficial because it’ll be easier to find another trader to take the opposite side of a trade and act on market trends in an agile manner.
Example: Bitcoin (BTC)
Bitcoin enjoys the highest market cap ($102 billion) and volume ($16 billion daily) of any cryptocurrency and has yet to be unseated. It’s the grandfather coin and remains popular among traders due to its first-mover status, and an ambition to replace banks. With the decentralized ledger used to keep track of BTC transactions over a peer-to-peer network, its main value is derived from the ability to transact easily across the globe, but also its place as a common counter-currency.
- Follow the Value
Blockchain is good at improving services that already exist, but also creating new value-added utilities as well. New and improved blockchain platforms have cryptocurrencies that generate value because their core ideas are so useful, and these are excellent assets to trade because of their potential.
Example: Ethereum (ETH)
Ethereum is called the “decentralized computer”. As far as creating value using new ideas, there are few more impressive. Used as a type of fuel to power applications on its blockchain, people can also use ETH to participate in games, decentralized financial services, and blockchain businesses that are a part of the growing Ethereum ecosystem.
- Private Sector Enthusiasm
Look for mature blockchain solutions that have a market history, established team, and some sort of partnership or integration with the traditional private sector. It’s well and good to exist in the margins and slowly steal value from a business sector, but blockchain and crypto solutions that are invaluable enough are readily welcomed by those with deep pockets. This ensures a future purpose and progress to fuel fundamental price action.
Example: Ripple (XRP)
Ripple takes a constructive view of blockchain and resists the decentralized model in favor of its own administrated approach, exemplified by the cryptocurrency XRP which has some of the fastest transaction speeds in the market. Moreover, a notable group of international banks have partnered with the Ripple Foundation to appropriate XRP’s agility for their own purposes, and the list continues to grow.
It’s important for traders who don’t want to operate blockchain wallets and would rather have a unified investment portfolio to consider accessibility. Some cryptocurrencies are only available on the blockchain, necessitating knowledge about public and private keys, operating on exchanges, and more. For many it’s preferable to trade cryptocurrency Contracts for Difference (CFDs) with an online platform like Plus500, which offers direct bank deposits and CFDs for Bitcoin, Ethereum, Ripple and more (Availability subject to regulation).
Cryptocurrencies that are tradable as CFDs allow users to participate in these volatile markets without holding the underlying coins themselves. For instance, the BTC Plus500 instrument mirrors the rises and falls of Bitcoin itself, empowering traders to take advantage of its noteworthy price swings from outside the blockchain ecosystem.
It may be the new kid on the block compared to traditional assets, but cryptocurrency’s limited lifespan has proven nothing short of breathtaking. Although enormity of the risk does merit caution, traders with a taste for volatility will appreciate cryptocurrency’s immense possibilities.
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