Which crypto is the best for trading?

Choosing a crypto for trading on an exchange is a crucial decision for any investor in the world of digital assets. Investing in an underperforming asset can potentially lead to significant losses. Future investors should carefully assess the long-term prospects of a cryptocurrency before trading it on any exchanges.

Beginner traders might consider cryptocurrencies like Bitcoin or Ethereum, but these can be too expensive for smaller investments. In this case, you should explore a wide range of other cryptos or even different crypto pairs for successful buying and selling on the exchange. It’s crucial to thoroughly check the potential of each coin to make the right decision.

Crypto trading rules

If you're wondering whether it's possible to profit on the exchange with minimal risks and what capital is required, it's worth exploring the basic principles for success in crypto trading.

• Researching on the topic

Before trading, you should learn the specifics of crypto exchanges, assess potential risks, volatility, and liquidity of the coin you choose for trading. You need to give special attention to analyzing statistics to identify key patterns in cryptocurrency transactions. This will make your trading process much easier in the future and help you save time and money. For example, you can identify the peak of trading activity by observing daily trends, which often occurs at the start of the business day. At midday, you may observe a slight decline in active trading on the exchange.

Specific trends can also be noted within weekly monitoring. Trading activity typically increases at the beginning and end of the week, while midweek often sees a dip in crypto exchange activity. International holidays and vacation seasons also impact trading patterns. To identify these trends, you need to analyze charts, including Bitcoin's performance over the last 3-5 years, once or twice every few weeks. Regular monitoring provides insights into what is the best crypto for trading on the exchange.

• Technical analysis is important but not key

While technical analysis is useful for trading in stock and currency markets, where tools like support and resistance lines or moving averages can be highly effective, it’s not as reliable in crypto trading. The movement of cryptocurrencies is heavily influenced by the direct actions of traders, including pumps and dumps, as well as event media coverage. The crypto market is much more volatile compared to traditional currency or stock markets.

This volatility in the value of certain coins on the exchange forces traders to make quick decisions without getting distracted by numerous charts. When analyzing the crypto trading platform, you should focus on crowd psychology and the actions of experienced traders. This approach helps beginners avoid significant losses and also presents great earning opportunities.

• Using a crypto rate chart

In crypto trading, one of the most convenient tools is the rate chart of the selected crypto, whether in relation to a fiat currency or another cryptocurrency.

• Realistic prospect assessment

In addition to analyzing charts, forecasting the potential price movements of selected digital coins plays a crucial role in crypto trading. This can be done by assessing your chosen coin’s growth dynamics, its expected popularity, and future demand.

Criteria for choosing a crypto for trading

If you’re wondering how to choose a cryptocurrency, the first thing you need to do now is to evaluate the overall market situation and assess the potential risks of purchasing crypto for trading. The crypto market is characterized by each digital coin going through phases of decline and growth. It’s advantageous to buy cryptocurrencies during sharp price drops. Conversely, the optimal time to sell the digital coin is when its price reaches a peak on the exchange.

Before creating a trading plan, you need to decide between major cryptocurrencies and altcoins. Bitcoin and Ethereum offer reliable investments with relative stability, allowing for steady profits and minimizing mistakes. On the other hand, while altcoins might present greater profit potential, their markets are less stable and predictable. If you choose to trade altcoins, it’s advisable to rely more on your own analysis and assessment of their potential.

Here are the main criteria to evaluate the potential of a coin:

• Creation purpose. Most cryptocurrency projects are developed to address specific problems. Some aim to provide maximum user anonymity, while others focus on integrating artificial intelligence. Cryptocurrencies created without a clear purpose are unlikely to evolve and should be excluded from consideration in both futures and spot trading.
• Structure. Potentially promising assets are often coins with a limited supply. Once the maximum number of tokens is mined, their price tends to increase due to the restricted availability. Additionally, it's useful to study the blockchain consensus algorithm used by the cryptocurrency project in question. Specialized services like CoinMarketCap help you realize how different coins operate.
• Project description from the authors. Before purchasing cryptocurrencies for trading, you should find the information published by the developers on social media or the official website. Data on the user activity also impacts the project's potential. For example, Ethereum provides comprehensive information on its official site and through its developers' social media pages.
• Investment volume. The amount of money people invest in a project is a strong indicator of a cryptocurrency's potential. Crypto investors often make their choices based on insider information about new cryptocurrencies for trading. Therefore, a coin’s potential directly depends on the volume of funds invested in the project.
• Reactions to major news events. Observing how crypto users react to news events can provide insights into its prospects.

Crypto trading stages

When developing your investment strategy, you need to pay attention to the key crypto trading steps:

• Registering on a crypto exchange

First, you need to create a crypto wallet for conducting cryptocurrency transactions if you don’t already have one. During this process, you’ll need to provide personal identification information. Specifically, you'll be required to enter your home address, email address, and date of birth.

• Funding your trading account

After completing the registration, you should link your bank account to your personal account. In many cases, standard debit cards from various banks and countries are accepted. Additionally, funding your account via bank transfer is often available and is currently the most cost-effective option.

• Starting trading

To get started, you might consider using automated trading bots. This can be a practical approach while developing your cryptocurrency trading strategies. The goal of trading with these bots is to maximize profits based on your established investment goals.

These bots offer different trading styles, including conservative, neutral, and aggressive options, allowing you to align their approach with your specific goals like saving money, diversifying your portfolio or making a quick profit. Additionally, you can manage trades across multiple exchanges — actively trading on some platforms while deploying trading bots on others.

• Storing cryptocurrency

Crypto wallets come in two main types: hardware and software. The first ones offer a high level of security since the coins are stored on a physical device that isn’t connected to the Internet. The second ones are also quite reliable for trading and withdrawing funds, though they are connected to the Internet. It’s worth mentioning that they may be more susceptible to online risks compared to hardware wallets.

Best cryptos for trading

If you’re eager to get a clear picture of how to choose a coin for cryptocurrency trading, it’s worth looking through the list of the top cryptocurrencies and exploring their main features outlined in our article.

Ethereum (ETH)

Ethereum ranks second in trading volume, right behind Bitcoin. Its massive popularity is driven by the introduction of smart contracts. The use of the ERC-20 standard opened doors for creating new tokens on an already established blockchain. Unlike Bitcoin, Ethereum doesn’t have a cap on its total supply. However, with the London upgrade, a coin-burning mechanism was introduced during transactions, turning Ethereum into a deflationary asset..

This cryptocurrency is available on almost all exchanges. By the end of August 2024, the ETH project boasted a market capitalization exceeding $ 332 billion.

Ripple (XRP)

This project was originally developed as an alternative platform for fast and secure cryptocurrency exchanges. As of August 2024, Ripple's market capitalization stands at $ 32.4 billion, which is a significantly high figure. This places the coin among the top 10 cryptocurrencies by market cap.

It has significant differences from traditional digital assets:

• Centralization. This project is centralized since it’s managed by a private company that owns the majority of the coins available on the market.
• No mining. You can’t mine these coins since they were all issued at once.
• Consensus registry (Ledger). The blockchain accepts all types of assets that can be bought and sold through the XRP Ledger protocol.

Chainlink (LINK)

Launched in 2017, this crypto has since become part of the smart contract infrastructure alongside other projects. Chainlink enables seamless interaction between different blockchains and provides access to external data sources. The ecosystem operates on the Ethereum blockchain. By the end of August 2024, its market capitalization reached $6.43 billion.

Litecoin (LTC)

It was developed based on Bitcoin and released in 2011, making it the first BTC-based altcoin. The block size and total supply were initially increased. Litecoin gained real popularity when Bitcoin began facing clear issues with scalability and increased network congestion. As a result, many users turned to LTC as a viable alternative.

Bitcoin Cash (BCH)

The project began in 2018 and eventually became the most well-known fork of BTC. The creation of Bitcoin Cash (BCH) stemmed from a division in the blockchain, driven by the reluctance of many network participants to alter the original protocol to improve scalability. The codebases of BCH and BTC are nearly identical. One key advantage of using Bitcoin Cash in trading is the availability of transactions with low fees.

Stellar (XLM)

This project made history by being the first to introduce coin tokenization. In other words, every participant has the right to create their own stablecoin by digitizing any asset. It can be freely traded and exchanged, opening up new possibilities for ownership and transactions.

Cardano (ADA)

This platform provides you an opportunity for executing smart contracts and makes transactions on the decentralized market. Cardano is seen as an advanced alternative to Ethereum, operating on its own Ouroboros blockchain with a Proof-of-Stake protocol. It offers high performance, with a single channel's throughput exceeding 1 000 transactions per second and instant transaction confirmations. These features made ADA highly popular among traders.

EOS

The project is positioned as the ideal platform for deploying decentralized apps based on blockchain technology. It uses the DPOS (Delegated Proof-of-Stake) algorithm, which allows the processing of several million transactions per second. This ensures that you experience no delays when connecting to the network. By August 2024, EOS achieved a market capitalization of $ 756.59 million.

DASH

This project was the first to implement multi-level transaction confirmation involving masternodes — special blockchain nodes responsible for validating data to increase network speed. DASH operates using a special program called PrivateSend, which increases transaction anonymity.

BTC

Finally, we turn to the first cryptocurrency: Bitcoin, which still leads the digital asset market. On one hand, it’s one of the most popular investment objects; on the other hand, trading Bitcoin can be quite complex. The Bitcoin rate significantly impacts the movements of other cryptos.

For example, a decline in BTC’s price almost always leads to a drop in the value of other coins. Today, Bitcoin's dominance index, which represents the ratio of its market capitalization to that of other assets, stands at around 40%. The total value of the first cryptocurrency has already exceeded $ 432.62 billion.

Every experienced trader certainly has their own tried-and-true methods for selecting the optimal trading currency. However, most often these methods rely on the same fundamental criteria.

F.A.Q.

What is crypto trading?

In simple terms, it’s the process of buying and selling a digital coin to make a profit. You buy the cryptocurrency at a lower price and then sell it at a higher price, earning money on the difference.

What are the criteria for a promising cryptocurrency?

When choosing a coin for trading, you should consider the following criteria: purpose of creating a crypto, its structure, a project description from the authors, investment volume, and users’ reaction to the coin.

Which exchanges are best for buying cryptocurrency?

According to CoinMarketCap, the top exchanges for buying cryptos are Binance, Coinbase Exchange, and Bybit.

How do I identify a project worth investing in?

Before investing, you should consider several key criteria for a successful project: the development team, detailed documentation, MVP presence, security and transparency, as well as the project’s uniqueness and token liquidity.