Best Cryptocurrencies To Invest In For February 2022
Cryptocurrency is here to stay. When Bitcoin first launched in 2009, there was only one cryptocurrency on the market. Fast-forward over a decade, and there are thousands upon thousands of cryptocurrencies to choose from. With so many options available, new investors may feel overwhelmed with how to choose which projects to invest in.
This technology has quickly grown into a $2 trillion industry by market capitalization, and thousands of projects have developed to allow additional functionality for users to transact. While investing in crypto is still a speculative venture, weve reviewed some of the top projects on the market today to help educate new investors on which projects are currently the most valuable.
Can You Lose All Your Money In Bitcoin
Yes you certainly can. Crypto is very risky and not like conventional investing in the stock market.
Bitcoins value is based purely on speculation. This is different to company stocks where the share price will move depending on how the business is performing.
Important: Cryptocurrencies are unregulated by the UK watchdog, the Financial Conduct Authority.
There are three main ways to lose all you money with bitcoin:
- The value plummetsand you sell: crypto is volatile with its price determined by sentiment. Though technically you only lose money if you sell an investment for less than you bought it for. This is known as crystallising your losses.
- Your memory: experts estimate 20 per cent of all cryptocurrency has either been forgotten about or lost with a current value of around $140billion, according to Crypto data firm Chainalysis
- Cyber crime: hackers and scammers are thought to steal around $10million worth of cryptocurrency every day, according to Atlas VPN
Some people choose to take their holdings offline and store it in a physical device called a cold wallet, otherwise known as a hardware wallet or cold storage similar to a USB stick. While this protects from online attacks you risk losing your holdings.
As with any investment, do your due diligence and dont pin all your hopes on one company or one cryptocurrency.
Spread your money around so you spread the risk and only invest what you can afford to lose.
Is There A Good Time To Buy
There is no general rule when to buy cryptocurrencies. Usually it is not a good idea to buy in at the peak of a bubble, and usually, it is also not a good idea to buy it when prices are crashing. Never catch a falling knife, as the traders wisdom says. The best time might be when the price is stable at a relatively low level.
The art of cryptocurrency trading is a vast topic in and of itself, and determining precisely when a crypto is in a bubble and when it has reached a local bottom after falling is not an exact science. What is easy to say in retrospect is a hard question to answer in the present. Sometimes a coin starts to rise, and after it passes a key line of historical resistance, and many believe it to be at the peak of a bubble, the real rally just begins.
For example, many people did not buy Bitcoin at $1,000 or Ether at $100, because it seemed to be overpriced. But years later these prices now appear to be an incredible bargain that will never again appear to the market.
This is definitely not financial advice, but some general guidelines to help you decide when to make an investment include:
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Find The Right Crypto Platform For You
Luckily for beginners who are ready to take on the risk of crypto, there are several methods when you’re just starting out.
You can easily buy cryptocurrency through traditional finance apps like Cash App, a peer-to-peer payment service owned by Block, Inc. that allows users to buy bitcoin only or PayPal, which allows users to purchase four different cryptocurrencies: bitcoin, ethereum, bitcoin cash and litecoin. Robinhood, the popular trading app, supports seven cryptocurrencies for purchase by users, and personal finance provider SoFi allows for crypto purchases of 21 different coins and crypto tokens on its app. These apps will not let you send your tokens off to a crypto wallet that you own.
The above apps that support crypto trading offer a limited selection, however, which may make buying crypto on a centralized exchange instead more favorable. Popular crypto exchanges include Coinbase, Gemini and Kraken. With a centralized exchange, investors get some insurance in case of cybersecurity breaches, regulatory clarity since they are licensed businesses and help safeguarding assets. In exchange, however, there is essentially a middleman between you and your assets, and your funds can be frozen or constrained at any time.
If you want more ownership over your crypto after making a purchase from a centralized exchange like Coinbase, you can transfer your assets to a crypto wallet that you have more direct ownership over.
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Read The Projects Whitepaper
When youve found a cryptocurrency you like, the first thing you need to do is read the whitepaper.
A white paper is an authoritative report or guide that informs readers concisely about a complex issue and presents the issuing bodys philosophy on the matter. It is meant to help readers understand an issue, solve a problem, or make a decision.
Reading the whitepaper will give you two tremendous benefits:
Is There A Less Risky Way Of Investing In Crypto
Stablecoins could be a less risky way of investing in cryptocurrency, according to Gavin Brown, associate professor in financial technology at the University of Liverpool.
Brown points to tether, the largest stablecoin, backed by one dollar per coin. It topped the $50 billion mark on 26 April 2021 but he warns that potential investors shouldnt necessarily see tether as the next big thing.
In theory it wont ever be worth more than a dollar. But its potentially an interesting option for any varied portfolio and it could be a slice of stability if things start to suffer.
The stablecoin has not been without controversy either being fined by the New York Attorney General and banned from the state the year.
You could also buy shares the companies associated with bitcoin.
There are also some funds and investment trusts that have exposure to cryptocurrencies, which is a less risky way of investing than buying the currencies themselves.
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Cons: Why Investing In Compound Could Be Risky
Aave by far is Compounds biggest issue. Aave is one of the most popular lending platforms in the market but the two differ in the products they offer crypto holders and how they function.
While Compound might be leading the way by getting institutional money into crypto-lending and DeFi, but it doesnt mean that it will be the last and most successful.
Furthermore, we also need to consider potential DeFi regulations that could be put into place in the next few years.
What Are Cryptocurrency Etfs
Before I get into the list of the cryptocurrency ETFs in Canada, lets take a look at what they are.
Exchange-Traded Funds are typically considered as an ideal way to get exposure to a basket of securities to investors, allowing them to diversify their capital allocation across several securities.
Most ETFs offer a relative degree of safety to investors by diversifying their funds into different assets. If the price of one of the securities within the funds portfolio declines, the price of other commodities can offset the losses for investors.
You dont have to worry about buying individual securities and maintaining a balance in your portfolio to align with your financial goals and risk tolerance.
However, cryptocurrency ETFs paint a different picture. When you buy cryptocurrency ETFs, you gain exposure to the underlying cryptocurrency. So far, there are only two broad types of cryptocurrency ETFs in Canada Bitcoin and Ethereum ETFs.
These ETFs invest directly in the physically settled cryptocurrencies and holds them in cold storage on your behalf. When you purchase a crypto ETF, you are buying the digital asset which is being held by a third party. The value of your holdings will vary based on the performance of the underlying cryptocurrency.
Do not confuse crypto ETFs with blockchain ETFs. Blockchain ETFs have holdings in companies that develop or use blockchain technologies they dont specifically invest in cryptocurrencies.
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What Cryptocurrency Should You Invest In
First, Blockgeeks does not give financial advice, and second, never asks anyone else what to do with your money, least of all Google! Always educate yourself, understand the risks, the all possible outcomes, and dont make any investments if you are not 100% comfortable with your decision.
That said, Bitcoin remains the undisputed king of cryptocurrencies its been around the longest and has the largest market capitalization of over 674 billion USD . is the total value of all tokens available, or the price of each token multiplied by the number of tokens in circulation.
However, there are other cryptocurrencies to choose from, such as Ethereum, Cardano, Litecoin, and thousands of others. They all differ in price, availability, demand, transaction speed and fees, and the technology that supports them.
The website CoinMarketCap lists over 5,000 options in order of decreasing market capitalization. Here are the top 10 and their performance as of May 2021.
It doesnt matter what the price of a given cryptocurrency is, you can always buy a fraction of a token. For example, if 1 Bitcoin costs $35,000 USD, you can always buy 0.0001 Bitcoin for the equivalent of $350 USD.
When researching tokens to invest in, you can take a look at CoinMarketCap to get a snapshot of the top performers, but your research should not stop there. In fact, thats where the real work begins.
Think About The Value That The Project Is Bringing In
Check to see whether the project is bringing in any practical utility into the ecosystem. The perfect example of this is Ethereum. There is a reason why it took off so fast for the first time, developers around the world had a platform that they could use to build their own dapps or decentralized applications on a blockchain.
Along with that, keep in mind the issues that the crypto world is desperately looking to solve privacy, scalability, and interoperability. A good way to go about your investment is to find the projects that are specifically working on solving these problems.
As of 2021, the players trying to solve these same problems and roll them all into their platform, or Layer 1 network include:
Each token role has its own purpose, as outlined below:
- Right: the token holder gets a certain amount of rights within the ecosystem, such as the right to vote.
- Value exchange: the token helps buyers and sellers trade value within the ecosystem.
- Toll: the token acts as a toll gateway in order for the holder to use certain functionalities of the system.
- Function: the token enables the holder to enrich the user experience inside the confines of the environment.
- Currency: the token stores value that can be used to conduct transactions both inside and outside the ecosystem.
- Earnings: the token provides an equitable distribution of profits or other related financial benefits among investors.
So, how does this all help with evaluating token utility?
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Why Is The Crypto Market Going Up In Value In 2022
Whenever you want to know why the crypto market is going up in value, follow Bitcoin and you will always find out why it is either rising or falling.
Bitcoin was already on a bullish path in late 2020 with many speculating it was the result of increased investor interest. But in 2021, Elon Musk has been one of the most influential people in crypto.
But what made the crypto market go crazy in 2021 was when Tesla purchased $1.5 billion in BTC and planned to start accepting it as a payment method.
More recently, Bitcoin started to ascend upwards again to $45 when Amazon put out a job post for a Digital Currency and Blockchain Product Lead. Very quickly rumours started to spread that Amazon might start accepting Bitcoin .
Tip #4 Use Dollar Cost Averaging To Buy & Sell Crypto
Everyone knows that crypto prices are extremely volatile. Beginner investors tend to be overly optimistic and focus on the upward volatility. FOMO may drive some to deploy capital into crypto purchases as soon as possible. The risk is that in doing so, the beginner investor may actually buy at high prices only to see their investments go down in value.
A better approach is to use the Dollar Cost Averaging strategy. This strategy involves making purchase at regular intervals over certain period. For example, lets say that you want to invest $5,000. One way to invest this amount using the DCA strategy would be to purchase $1,000 each month for a total of 5 months. In doing so, you are more likely to weather crypto volatility.
The DCA strategy can also be used for selling. Lets say youve held on to your crypto investment for 5 years and you have some nice gains youd like to realize. Perhaps you want to withdraw $50,000. You could withdraw $10,000 per month for five months instead of withdrawing all $50,000 at once.
Keep in mind most cryptocurrency exchanges have features to allow investors to purchase crypto on a regular intervals .
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Do You Really Need A Crypto Wallet
In the early days of cryptocurrency, when crypto exchanges were more likely to get hacked, investors definitely needed a crypto wallet. But, nowadays, crypto exchanges have really stepped up their security measures, making them a much safer place to store a private key.
If an investor wants extra security, or plan to spend crypto at retail stores, they should consider getting a wallet. Likewise, if theyve amassed a large amount of cryptocurrency, then a crypto wallet might be the safest place to store them.
Store Your Cryptocurrency In A Wallet
Once youve purchased a unit of crypto, itll be added to your wallet. Not your actual wallet, of course, but a virtual wallet that youll receive when you open your account with an exchange. The wallet will hold the codes for all your cryptocurrency.
There are software wallets and hardware wallets. A software wallet is just a software program that holds your crypto. You need it for active trading, and youll typically get one when you open an account with an exchange.
A hardware wallet is a physical device that holds crypto. It looks like a USB drive, and its more secure than a software wallet, but its not necessary unless youre buying a huge portion of crypto.
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S For Investing In Cryptocurrency
First things first, if youre looking to invest in crypto, you need to have all your finances in order. That means having an emergency fund in place, a manageable level of debt and ideally a diversified portfolio of investments. Your crypto investments can become one more part of your portfolio, one that helps raise your total returns, hopefully.
Pay attention to these five other things as youre starting to invest in cryptocurrencies.
Crypto Friendly Banks Uk
Most of the UKs major banks now let you move money between a regulated crypto exchange and your bank account.
However, some banks are more cautious than others. For example, Starling Bank had imposed a temporary suspension on outbound faster payments to cryptocurrency exchanges in order to protect customers.
The banks are continually weighing up the risks and some make it easier for customers to move money to and from crypto exchanges.
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Capitalcom Trade Bitcoin At 0% Commission
If youre looking to trade Bitcoin and other cryptocurrencies via a shorter-term strategy, then you might want to check out the Capital.com platform. Unlike eToro, Capital.com does not allow you to directly invest in Bitcoin. This is because the platform specializes in CFD products.
In a nutshell, CFDs at Catpial.com enable you to trade the future value of Bitcoin without actually purchasing or storing any tokens. For instance, if you stake $500 on a Bitcoin buy order and the value of the digital currency increases by 10% you will make gains of $50. Although CFDs wont be suitable for all investor profiles, they do come with a range of benefits.
For example, when you trade Bitcoin CFDs at Capital.com, retail clients can apply leverage of 2x. This turns a $500 stake into trading capital of $1,000. Moreover, you also have the option of choosing from a buy or sell order. The former can be used if you think the value of Bitcoin will rise and the latter if you believe the opposite.
We also like Capital.com for the number of cryptocurrency markets that it gives you access to. In total, Australians can trade the future value of more than 470 digital currency pairs. This includes dozens of Bitcoin-denominated markets such as BTC/AUD and ETH/BTC. And, irrespective of which pairs you trade Capital.com does not charge any commissions.
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Cryptoassets are a highly volatile unregulated investment product.