Crypto is the biggest investing opportunity in a generation. But how do you find the best cryptocurrency to invest in?
This is an especially vexing question for investors new to crypto. Frankly, even a lot of veteran crypto investors struggle with it.
In addition to the big names that attract the most attention, such as Bitcoin (BTC) and Ethereum (ETH), there are literally thousands of cryptocurrencies to choose from.
How can you know which ones are the most likely to pay off and which are black holes for your money - or worse - outright scams?
Longtime stock investors quickly discover that you can't analyze cryptocurrencies in the same way you can analyze equities. Cryptos have no revenue, no cash flow, no CEO, no price/earnings ratio.
In fact, crypto critics often point to such things as the lack of cash flow as "proof" that cryptocurrencies have no value.
What they don't get is that crypto is a brand-new asset class. You can't value it using metrics for other types of assets like equities.
But that doesn't mean there's no way to measure the value of a cryptocurrency.
Crypto has its own set of metrics investors can use to analyze and rate each coin.
And today we're going to tell you exactly what they are and how to use them...
At first it may seem like cryptocurrencies wouldn't have much information you could analyze. But they do - and it's out there if you know where to look.
Good places to start your crypto analysis include websites like CoinMarketCap, CoinGecko, Defi Pulse (for DeFi-related tokens), CoinStats, and CoinMetrics. You might also want to look at crypto rating sites such as TokenInsight and Flipside Crypto's Fundamental Crypto Assets Score (FCAS) tracker.
Of course, you should absolutely also look at the cryptocurrency's official web site. There you will find a lot of background information on the coin and its developers, as well as the "white paper" that defines the project and its goals.
And like stocks, you don't just want to look at numbers. Other aspects of a cryptocurrency are just as important.
Here are the key things investors need to check:
Once you've found a coin that scores well on these criteria, then you have to decide how much you want to buy. That will depend on your overall crypto investing strategy and how many different cryptos you want to own.
If the coin's price is a bit higher than you'd like, consider starting with a small position and adding on pullbacks. Crypto is volatile enough that pullbacks are almost inevitable.
Finally, don't let your enthusiasm for a coin get the better of you. Invest an amount appropriate for your financial position. Putting half of your investable assets in one cryptocurrency, no matter how much you like it, is a bad idea.
My rule of thumb is that for the typical retail investor, crypto should make up less than 5% of their portfolio. Remember, crypto investing carries substantially more risk than investing in stocks.
Our resident Silicon Valley insider is recommending three under-the-radar digital coins as today's BEST crypto buys.
They're much smaller and more affordable than Bitcoin, with up to 10X the growth potential as Dogecoin in the coming years.
One is trading for around $12, and predictions suggest that by the end of this year, the price could sit at $88.56 - a 638% profit.
To learn about all three - and discover how even a small stake could transform into a small fortune in 2021 - click here.
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About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.