Picking potentially top performing cryptocurrencies in any given period is a hard enough task at the best of times, but in a period when the markets are in turmoil you might think that this task is even harder. However, what times like this allow us to do is look more at the fundamentals of a project and make a decision as to whether they can come out of this period of uncertainty intact and kick on in the second half of 2020.
In this guide we run down what to look for when considering what to buy in order to set yourself up for success when the money starts coming back into the crypto space.
Fundamentals and Active Development
Too many cryptocurrencies lack a fundamental use case yet skyrocket in price while others have the huge partnerships yet do relatively little. However, in time the cream will inevitably rise to the top, so take the time to do some research on which projects have genuinely good fundamentals.
This can be done by referring to whitepapers, checking the project’s social media updates, and generally scouting the internet to ascertain how the project is perceived. This will not only help you get a good grounding on which projects are highly thought of and are still being developed, but it will also highlight any potential scams.
There is a kind of cheat you can apply to your search for a quality cryptocurrency – the roadmap. This is the document that maps out what the project hopes to achieve in the coming months and years as it is developed and should be regularly updated to reflect development achievements and delays.
Milestones like hard forks, mainnets, and client onboarding target dates often result in positive price action in the run up to the event, so once you’ve identified a possibly fundamentally sound project, check for any big milestones occurring in 2020, as these could predicate a big price rise once the market picks up.
While you’re there, compare their roadmap with their development to date and see if they are consistently hitting or missing their milestones.
How Was it Performing Before the Crash?
While short term price action is not necessarily a guide to future performance, those coins that were performing well before the crash this month should be worthy of some attention as there is a good chance they will pick up where they left off. Some examples are Tezos (XRZ), Link (LINK), and FTX Token (FTT).
Take a few minutes to check out the price action of any tokens that catch your eye to see how they were performing before the crash and you might get an insight into those coins that might hit back harder. Equally, those who made little to no movement in January while the rest of the market was rocketing should be avoided.
Wise Heads Have Big Caps
Discovering a bucketful of undiscovered gems is great of course, but don’t discount the big caps. The likes of Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC) have the ability to move markets (or portions of it) on their own, so it is almost an unwritten rule that you should hold some of these big caps as well as your small cap gems.
Fortunately, there is good reason to do this. On a fundamental level Bitcoin’s stock has never been higher, what with the “infinite cash” promised by the Federal Reserve in response to the coronavirus outbreak, while the Ethereum-based DeFi movement has gathered pace massively in the past nine months, showing that the use cases for Ethereum are strong and growing.
Add to this the fact that Litecoin had its hard fork eight months ago and you have several reasons why holding big cap coins is a good idea going into the second half of 2020.
Buy, Hodl, and Wait it Out
We hope this has given you a good idea of how to choose some potentially winning coins for 2020, so that when the world comes out of quarantine you can start to make some money! There are thousands out there to choose from so you’re not always going to back winners, but doing your due diligence can reduce the odds of you backing a donkey in a thoroughbred race.