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Bitcoin is the first and largest digital asset in the world. It is also the pioneer of the entire crypto industry and, a vast audience in the crypto community has invested in it. However, Bitcoin is not the only prominent digital asset in the market. There are many altcoins, some of which are speculated to outperform the flagship cryptocurrency, thanks to their high-end blockchain technologies, upcoming advanced upgrades and more.
People who invested in BTC in the beginning may now be reaping the rewards as the crypto king has taken off over the last few years. Now crypto investors are interested in finding the next best digital currency that will perform well in the future.
The prices of altcoins are also greatly dependent on Bitcoin, therefore, you need to be vary of BTC’s fundamentals before selecting the altcoins you want to buy. Here is why Bitcoin affects the price movement of altcoins.
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What are Altcoins?
You should know what altcoins are before you start exploring different factors that can help you identify the next best altcoin.
The term ‘altcoin’ is an abbreviation for ‘alternative coins’, where the coins are digital coins or crypto assets. Every other cryptocurrency or token apart from Bitcoin is called an altcoin.
Altcoins are created for different purposes. For instance, some have been created as a payment method, also known as utility tokens, while others provide voting privileges, also known as governance tokens.
Some altcoins have seen global adoption and include the following:
Make sure you choose the best crypto exchange to buy altcoins once you have identified which one you want to invest in.
What to Analyze for the Next Best Altcoin?
Crypto investing needs to be done carefully and only after the investors have a good amount of information on what to purchase. As a new investor, if you buy an altcoin that does not have a solid foothold in the market, you can lose your investment.
Therefore, it is important and beneficial that you do thorough research before choosing any altcoisn to buy.
Here are a few factors that can help you choose the next best altcoin.
Legitimate altcoins often have a group of people supporting them, which is how a solid community is formed. The community supporting a specific digital asset may include developers, potential investors and miners. The popularity of an altcoin among people who adopt and support it also indicates the legitimacy of the asset.
In other words, solid and active communities supporting an altcoin can indicate that it is a good digital asset to invest in.
Assess the Team Behind the Altcoin
Thoroughly assessing the team working behind an altcoin can also help you identify the best option.
It can be difficult to asses which crypto project is authentic or suitable since there are so many projects going on in the crypto space. However, taking a look at the team working behind the altcoins you are interested in can help.
Apart from extracting information from a project’s white paper, you should also do independent research and look through the team’s publicly accessible information. You can see their credentials and other well-reputed projects they have worked on.
Comparison Against Competitors
There are several categories of crypto projects, including payment coins, NFTs (non-fungible tokens) and decentralized finance (DeFi).
Some of the altcoins have similar utility, which is why, it is helpful that you compare the crypto projects with their competitors.
We can consider the example of the popular altcoin Cardano (ADA). This project has smart contracts and is known to be technologically advanced, launching innovative upgrades with time.
Some of the main competitors of Cardano (ADA) are:
- Ethereum (ETH)
- Solana (SOL)
Even though more than one altcoin can grow and become prominent in the same category, a comparison can highlight how dominant each altcoin is and how their utilities vary.
One of the most helpful ways to identify the next best altcoin is to analyze the market capitalization of a cryptocurrency.
Market capitalization or market cap gives an idea of the total amount of money invested in a certain altcoin project. This highlights the long-term value and worth of a digital asset and indicates its potential of growth and stability.
Altcoins that have a higher market cap are better in terms of investing because there is more money flowing into them. Low cap coins on the other hand have less money flowing into them, which is why they are more volatile and riskier to invest in.
Therefore, you can identify the next best altcoin by analyzing its market capitalization. If you are new to the crypto space, you should also take a look at some of the top altcoins you can buy for under one dollar.
Possibility of Adoption
Sometimes the probability of a crypto asset being adopted depends more on its value (especially long-term) rather than its price in the market. Bitcoin can be taken as an example. Even though the price of the crypto king fluctuates a lot, it does not affect its likeliness of being adopted by individuals, global companies and even countries around the world.
However, the same cannot be said for altcoins. While some of the altcoins have lucrative use cases and strong communities, others do not. In short, the prospects of adoption of the altcoins can help you make your selection.
Roadmap of the Altcoin
A roadmap is a technique that helps in project planning, whether it is for the long-term or short-term. It also helps potential investors in knowing the future and past objectives, performance goals, timeline for the development of the crypto asset and more.
The roadmap of a legitimate altcoin that has been developed with a long-term plan in mind should include the following details:
- Clear timeline for the development of the digital asset
- Major updates to be launched in the future
- Total amount of the coins that will be produced or already are in circulation
The white paper of an altcoin will offer several crucial details to you, which can help you identify if a specific digital currency is worth your time and money or not. A white paper is essentially a detailed explanation of how the project has been developed, what is set to be achieved in the future and how the altcoin provides value for its users.
Some of the aspects of the altcoin addressed in a well-informed white paper are:
- Future plans
- Basic technology used
As a new crypto investor, there are several details you need to be familiar with before you begin. Knowing which kind of cryptocurrency to purchase is one of them. Since there are numerous altcoins available in the market, you need to know tips on how you can identify the best crypto asset to invest in except Bitcoin.
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The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.