How to identify profitable cryptocurrencies? What key metrics should we consider before investing?
09 June 2022
Question by Alex
How to identify profitable cryptocurrencies? What key metrics should we consider before investing? What would be your 5 of the best cryptocurrencies to buy now?
Answered by Boring Money
Thanks for your question.
Cryptocurrencies are unregulated, as you may know. Therefore, as regulated financial advisers, we cannot advise on crypto specifically.
I would be very careful about following anyone's tips on the '5 best cryptocurrencies'. Much like stock market investing, nobody really knows what individual investments are going to perform well over the short or long term. That's if you can class crypto as an 'investment' or 'asset' at all. With stock markets investing, we do know stock markets have historically gone up and perform better than cash. There are decades of evidence here. This is the reason people invest, rather than save in a bank long-term. Most investors will be buying thousands of companies at any one time, to capture the long-term market trend.
'Investing' in cryptocurrencies specifically - Ask yourself why you're investing? If you truly believe in blockchain technology or what a specific coin is used for, then you'll need to complete your own research and decide if buying crypto is the best choice for you. If you're hoping to get rich quickly because somebody else has, this is a sure-fire way to lose a lot of money quickly. Like all get rich quick schemes, it's normally the people that got in very early who get rich.
Additionally, have you maximised your pension contributions and ISAs every year? This would be the first point of call for any investor looking to build long-term wealth, rather than chasing the latest trend.
I hope that help for now.