Will Investors be Able to Predict How Successful a Crypto Will Be in the Long Run
Ever since Bitcoin launched in 2009 cryptocurrencies have captivated and excited tech enthusiasts and investors alike. It’s now reported that there are over 20,000 digital currencies to choose from, with new projects launched nearly every single day. Some of these projects are successful, while others flounder. This leaves many investors wondering if it’s possible to determine how successful a cryptocurrency will be in the long run. Let’s find out.
What Makes A Coin Successful?
Investors search high and low for new projects that they can buy into for relatively low cost that show promise of high returns. New coins are typically listed on exchange platforms, which allow crypto enthusiasts to buy, sell, and trade coins. TechReport author and crypto expert Will Macmaster explains that Coinbase is a popular exchange. Investors looking for promising new projects at a low cost often check out the Coinbase listing to see what projects are launching.
Before buying, expert investors will review coins to determine if they think they will be successful or not. While there is no surefire way to confirm a coin’s future success, there are certain aspects that investors usually check for. Let’s review what any investor, new or experienced, should look for before buying in.
Technology and Innovation
When considering a coin and trying to determine if it will be a success or not, it’s important to research the coin’s technology and innovation. Each coin is built using different technology. While most cryptocurrency is built using blockchain tech, it can vary in terms of scalability and security as well as utility. Investors often review a coin’s technology to see if it has:
Before buying into any crypto coin, investors should consider these important factors. The technology of a coin can make or break its long-term success.
Market Demand and Use Case
Another important aspect to review is the market demand and use case of any crypto. By choosing crypto with a high market demand, investors can set themselves up to see high returns and success in the future. Similarly, choosing a crypto that has real-world uses will likely also ensure the success of the project. For example, some coins have practical everyday uses. They can be used to buy things online, pay for trips, wager at online and anonymous casinos, and even buy cars. These coins, because they are useful, will likely do well.
Bitcoin and Litecoin are prime examples of coins that have real-world everyday uses and have seen success.
Community and Developer Activity
If long-term success and high monetary returns are important to investors, they should look for coins that have strong communities backing them with solid developer activity. Coins that have strong community backing are more likely to be successful in the long run. To check for a strong community, would-be investors should review online forums, chat sites, and blogs. Check for positive comments and insights from the development team. Similarly, keep an eye out for any negative chatter or other investors who seem wary of projects.
Beyond community engagement and backing, coins that have high rates of developer activity are also poised for success. Look for projects that have frequent code updates, bug fixes, and feature enhancements from the development team. Coins that show signs of developer activity will likely perform better in the long term as the coin’s tech will be constantly updated and enhanced.
Regulatory Environment
Serious investors looking for highly profitable cryptocurrencies will review the regulatory environment in which the coin is operating. This is important because clear regulations often enhance the value of a coin, whereas regulatory uncertainty or sudden changes can hurt the value of a coin. Investors who are looking for coins with high returns should do some research first in regard to the regulations that may hinder or help the growth of that coin.
Market Sentiment and Investor Confidence
Crypto is known to be volatile in nature, with its value often swinging up and down based on factors like market sentiment. Investors should monitor the news, recent partnerships, developments, and tech breakthroughs to see how they may impact the value of cryptocurrency.
For investors trying to determine if a certain crypto shows long-term promise or not, it’s smart to research past news articles and the history of the project to get an idea of its volatility. Furthermore, once the coin is purchased, investors should keep an ear to the ground for news updates and developments to ensure their investment stays safe.
Summing Up
With thousands of cryptocurrencies now on the market, millions of investors are constantly looking for the next best coin that shows signs of future success. While there is no surefire method to determine whether a crypto is certain to be successful or fail, there are certain aspects that investors can check for that typically indicate a coin will be successful, or not.
Investors should review the technology behind the coin, the market demand and use cases of any coin before buying in. Similarly, checking that there is a solid community behind the coin and reviewing any regulatory concerns can be helpful. Finally, investors should always keep an eye on the market sentiment, both before and after purchase.
FAQs
1. How much weight should I give to technical analysis when predicting the success of a cryptocurrency?
A thorough technical review of any coin is a smart idea before buying in. The technology of a coin is its building block, and this is one of the main factors that should be considered by investors who are looking for coins that show promise. While a complete technical analysis of any coin before purchase is smart, investors should understand that other features must be checked as well, like regulatory developments and market sentiment.
2. Can the past performance of a cryptocurrency reliably predict its future success?
Many investors will wisely review a crypto's past performance. While this can be one indicator of a crypto's promising future, it is by no means a foolproof way of determining whether a crypto will be a success or not. Market dynamics can change quickly and even if a coin was successful at one point, it does not mean it will be successful again.
3. Are larger cryptocurrencies always more likely to succeed than smaller, newer projects?
Some older digital currencies, like Bitcoin and Ethereum, have a very strong market presence and a proven track record, which makes them favorites with investors. However, these were also once small projects that savvy and forward-thinking investors purchased for mere pennies. Both large and small crypto projects can both succeed or fail and what investors should consider are the fundamentals of the project to determine if it is a solid investment or not.
4. How important is community engagement and developer activity in predicting the success of a cryptocurrency?
Community engagement and developer activity are both very important. However, these factors should be considered and taken into account along with the other important factors, like technology and regulations, listed above in this article. A solid crypto with a good chance of success in the future will not only just have strong community backing and developer activity, but will also feature the other aspects discussed within this article.
