How to Invest in Cryptocurrency? The Ultimate Guide
Wondering which cryptocurrency to invest in, what are the best exchanges to use, how to monitor your investment, and finally, what to do with it? Learn that and more in our ultimate guide on cryptocurrency investing.
1. Choose a cryptocurrency to invest in for benefit
Deciding which cryptocurrency to invest in can be difficult, especially if you are just starting out in crypto. The sheer number of choices can be overwhelming and lead to poor decisions. As a rule of thumb, choosing the right cryptocurrency investment hinges on several important factors, primarily risk tolerance and investment goals.
In the following sections, we’re going to explore what is the best crypto to invest in depending on your investment goals and preferences.
Keep track of your favorite cryptos by adding them to the watchlist.
Best crypto to buy
If you are looking for a balanced investment approach that is founded on digital assets with a proven track record – like Bitcoin and Ethereum – but still want to gain exposure to the latest market trends and promising projects, then we suggest that you follow our weekly updated recommendations of best cryptos to buy right now.
Whether you’re a seasoned investor or just starting out, this well-rounded selection should help you make informed trading decisions and lay a solid foundation for a well-rounded approach to cryptocurrency investing.
Best crypto investments for the long-time
Given the relatively nascent status of the cryptocurrency sector, the majority of investments in the space carry quite a bit of risk. However, there are several cryptos that have withstood the test of time and provide a great outlet for long-term crypto exposure. These digital currencies – like BNB, Litecoin, and Monero – have clear utility and are suited for investors that have their sights set on the future.
Best altcoins to invest in this time
Altcoins, meaning every digital currency apart from Bitcoin, vary massively in their market cap, utility, number of users, and roadmap goals. As of early 2023, there are over 22,000 altcoins in the market, and most will more than likely not be around in the next five years. However, several altcoins – including the likes of Cosmos and Polkadot – are among the best cryptos to invest in due to their upside and ambitious development goals.
Next cryptocurrency to explode
Finding the next cryptocurrency to have stellar market performance involves carefully examining the upside potential of each project, finding out the availability of the project’s digital assets on crypto exchanges, determining the extent of social media presence, and more. However, such investments always hinge upon a great deal of luck and speculation. Still, there are some projects, such as Aptos and Mina Protocol, that have clear upside potential and are more likely than others to explode in value.
Best new cryptocurrencies for earning
Many cryptocurrency investors and traders are attracted to new crypto projects that show great promise. Typically, investing in new projects is riskier than investing in established projects. However, new projects come with a larger upside potential, and the risk can be somewhat mitigated by choosing to invest in projects that are run by reputable team members and have clear and realistic roadmap goals. This year, Canto and Blur made waves as some of the most promising new cryptocurrencies.
Best cryptocurrencies under 1 cent
There are thousands of cryptocurrencies valued at less than 1 cent in the market. These coins and tokens are especially attractive to new investors as it might seem easier for the price to increase from 1 cent to 1 dollar than it is from $10 to $1000. However, that’s a bit of a misnomer, as the relative change in both cases is the same. Instead, a far more important factor to consider is the project’s market cap, as it gives more insight into how much a coin can appreciate in value. With that in mind, there are numerous great investments under 1 cent, like Shiba Inu and BitTorrent.
Next meme coins that could exploded
In 2021, Shiba Inu pulled off an unprecedented bull run, increasing in price by 430,000x over the course of the year. That same year, Dogecoin gained 3,500% and reached mainstream status, with Elon Musk declaring it its favorite crypto. Many investors are desperately trying to find the next Shiba Inu, and countless meme coins have emerged in recent years trying to benefit from the hype. However, Baby Doge Coin and several others are more than just simple copycats, leveraging their robust communities to build all-encompassing blockchain ecosystems.
Best crypto presales right now
Cryptocurrency presales offer tremendous upside as they allow investors to join projects in the earliest stages of their development. Historically, an investment in successful crypto projects during their token sales often netted investors 100x or even bigger gains.
For example, Ethereum is currently trading more than 4000x higher than when it was first sold. However, crypto presales are arguably the riskiest investments in crypto, as the money is invested in projects with no working products and services and major development hurdles that need to be overcome.
Each month, we curate the list of best crypto presales that we believe have the best chance of succeeding in the future, providing investors access to risky but potentially very lucrative opportunities.
Most undervalued cryptocurrencies in Crypto market
Technical indicators can be a useful tool to determine whether a cryptocurrency is trading in an overbought or oversold zone. On CoinCodex, we curate a list of the 100 most undervalued cryptos that is calculated using the Relative Strength Index (RSI), which is one of the most popular ways of determining whether an asset is fairly priced or not.
2. Choose a best cryptocurrency exchange
The next step after choosing the cryptocurrency you want to invest in is to find the best cryptocurrency exchange to place your buy order. The first thing to consider when choosing the crypto trading platform is whether it supports the crypto you want to invest in. There are hundreds of crypto exchanges in the market, which can make the decision process somewhat difficult. However, there are some that quite clearly stand above the rest.
- Binance is the largest crypto exchange in the world both in terms of trading volume and the number of users, and is widely considered the best crypto exchange overall. In addition to advanced trading solutions, Binance offers a wide range of products and services, including the P2P marketplace, NFT marketplace, Launchpad and Launchpool platforms, and more.
- KuCoin is hands down the leading exchange for investors that are looking for a wide range of supported altcoins. KuCoin lists over 700 coins and tokens and has cleared over $1 trillion in accumulated trading volume since its launch.
- Kraken has one of the longest track records among all crypto exchanges in the industry. It has been around since 2013, and has suffered no major security breaches during its decade-long operation. Kraken is also very transparent in the way it handles its reserves, allowing each user to verify their balance independently using the Merkle Tree technology.
- Coinbase is the premier solution for crypto beginners. It offers a very intuitive trading interface, and while it lacks some of the bells and whistles offered by its competitors, those who are just starting out in crypto most likely won’t miss them. Coinbase is also the only major publicly traded crypto exchange, which means it has to abide by strict regulations and that its business dealings are subjected to public scrutiny.
In addition to various features and supported coins, there are quite substantial differences between exchange fees. Binance, for instance, charges 0.1% for maker and taker fees, while Coinbase charges 0.60% for takers and 0.40% for makers. While the difference isn’t as pronounced if you are not a frequent trader, it can quickly add up for high-frequency traders.
3. How much money to invest in cryptocurrency
The amount of money that should be invested in crypto is predicated on each investor’s individual circumstances, goals, and risk tolerance. For an idea of what returns you can realistically expect when investing in crypto, you can check our crypto portfolio calculator.
Technically speaking, virtually every crypto asset can be bought in fractions, meaning that you can buy a couple of dollars worth of Bitcoin, for instance, even though the full unit of Bitcoin costs tens of thousands of dollars.
Whatever the amount of money you decide to invest, you should try to abide by several core investment principles to protect your portfolio from drastic downturns. For starters, don’t put all your eggs into one basket and try to diversify the crypto portfolio among multiple digital assets. This will increase the chances of surviving bear markets and have little to no cost on upside potential.
How a monthly Bitcoin contribution of $100 would fare over 10 years.
Secondly, you should try to diversify your investments beyond crypto. While the potential of decentralized money and financial systems is immense, no one can say for certain how things will play out in the future. Stocks, financial vehicles tracking stock market movements (for example, ETFs), and bonds can be good portfolio diversifiers. In addition, precious metals like gold and silver are also widely recognized as good buys for additional portfolio stability.
Finally, you should have realistic expectations about the potential profits you can make by investing in crypto. Investing $100 in Bitcoin today won’t make you a fortune, as BTC has a market cap too high to support 100x or bigger growth. However, a dollar cost average (DCA) strategy can go a long way toward growing your portfolio over time – a monthly contribution of $100 in BTC with a 10% yearly return will net you a portfolio worth more than $18,000 over 10 years. Binance’s Auto Invest 2.0 program is one of the easiest ways to DCA in crypto.
4. How to buy cryptocurrency form local currency
The process of buying cryptocurrency has become very streamlined in the past couple of years, allowing virtually anyone to engage in cryptocurrency trading and investing.
The most popular way of buying crypto is with fiat currencies, like USD, GBP, and EUR. If you want to buy crypto with fiat, you should check whether the exchange supports fiat payments, which are usually done via credit and debit cards or direct bank transfers.
You can also buy cryptocurrency with other digital currencies, for example, Ethereum with Bitcoin. Another popular option to buy crypto are stablecoins, which are digital currencies pegged to the value of fiat currencies or other real-world assets. Some of the most popular stablecoins are Tether and USD Coin.
Another thing to consider when buying cryptocurrency is whether an asset is bought directly (spot) or via a financial contract (futures, options). Here is a very brief explanation of each approach:
- Spot trade refers to the purchase or sale of a cryptocurrency for instant delivery on a specified spot date.
- Futures trade refers to the purchase or sale of crypto at a predetermined price for delivery at a specified time in the future.
- Options trade refers to a contract that speculates on the future price of a cryptocurrency. The underlying crypto asset can be bought at a specified price and date in the future.
If you want to learn more about how to buy crypto on various exchanges, check out our guide on how to buy Bitcoin on Binance. You can also check similar guides for Kraken and KuCoin. Keep in mind that the purchase process is very similar between different exchanges and cryptos.
5. What to do with your crypto investment
The next step after buying crypto is to decide what to do with your investment. There are a couple of different options.
Store your crypto in a hardware wallet
If you want to take withdraw your crypto from the exchange and thus ensure the highest degree of security possible, you can withdraw the crypto to a hardware wallet like Ledger Nano X, or Trezor Model T.
Hardware crypto wallets are arguably the most secure way to manage crypto assets. However, their security is in large part predicated on how well the seed phrase – the key used to unlock the cryptocurrency wallet – is stored. There are plenty of great seed phrase storage options available in 2023, but the virtually indestructible Billfodl takes the cake, at least in our opinion. The Bilfodl, in combination with a wallet like Ledger Nano X, is an unbeatable combo for secure self-custody of crypto.
Earn passive income
There are numerous lending and saving options available that allow users to earn passive income with crypto assets. For example, Binance Simple Earn and KuCoin Earn are two platforms that allow investors to earn staking and savings rewards via a streamlined and accessible interface. Keep in mind that while these solutions are great when everything is going smoothly, they introduce a degree of risk as the crypto deposited in various Earn products is custodied by a third party.
Use crypto credit cards and earn spending rewards
Another popular way to use crypto is for everyday purchases with crypto-supporting credit cards and earn rewards while doing so. For instance, Binance Card allows users to earn up to 8% in cashback if the user has enough BNB deposited in their account. In addition to cashback rewards, the best crypto credit cards let users take advantage of lowered subscription fees for popular streaming services, and other benefits.
6. How to monitor the performance of your crypto investment
If you want to see how your crypto investment is performing, you can track prices, market trends, and more on a crypto-tracking website such as CoinCodex. Moreover, on CoinCodex, we provide access to additional investment tools that can greatly enhance your crypto investment journey.
Crypto Portfolios
A cryptocurrency portfolio allows you to track the performance of all your cryptocurrencies in one place. Using our crypto portfolio tracker, you can easily follow the price movements of your crypto investments in real-time and track profits and losses adjusted by daily, weekly, monthly, and yearly time intervals. The crypto portfolio feature is available on desktop platforms as well as on iOS and Android.
Crypto news Alerts
Crypto alerts give you the ability to set up cryptocurrency price alerts and receive notifications via email or the app. Instead of constantly monitoring cryptocurrency prices, you can simply set up alerts that will automatically let you know when important price levels are reached.
Crypto Price Predictions like Bitcoin Ethereum Dogecoin cardano price
The cryptocurrency prediction section for Bitcoin and other digital currencies can give you insight into the future performance of your crypto investment. The predictions are generated automatically by an advanced algorithm that takes into account dozens of technical market indicators.
Crypto investing for beginners
The cryptocurrency space can seem a bit complicated for newcomers due to the thousands of different digital currencies, hundreds of exchanges, and numerous investment options.
If you are just starting out in crypto, we suggest that you limit your exposure to established cryptocurrencies like Bitcoin and Ethereum. In general, staple coins are the best cryptos for beginners as they are widely available and highly liquid.
In addition, you should sign up with a cryptocurrency exchange that is easy to use and doesn’t have an overwhelming number of features and options. Coinbase is a great choice for beginners. Binance is also a good choice, especially if the simplified “Lite Mode” is activated.
Is crypto a good investment in 2023?
The cryptocurrency sector has shown robust activity in the first part of 2023. Bitcoin, Ethereum, and numerous other cryptos saw their prices increase by high double-digit percentages.
For those wondering, “Is cryptocurrency a good investment in 2023,” the answer is unclear. With the macroeconomic situation being relatively unstable and more interest rate hikes on the way, no one can be certain how the economy, and subsequently, the crypto industry, will perform in the coming months. In fact, many analysts predict that a recession in 2023 is quite likely, which would likely introduce negative movement in traditional and crypto markets.
If you want to explore more about the reasons for and against the most popular cryptocurrencies being good investments, check out the following articles:
As with any investment, an investment in crypto doesn’t come without risks, and you should do your own research before investing any money.
Crypto investing FAQs
What is cryptocurrency?
Cryptocurrency is a type of digital money. It’s similar to regular money, but instead of being physical (like coins or paper bills), it exists only in a digital form.
What makes cryptocurrency special is that it uses blockchain technology. This is a way of keeping track of all the transactions that happen with the currency. Think of it like a giant spreadsheet that's shared with everyone who uses the currency. Every time someone makes a transaction, it gets added to the spreadsheet, and everyone can see it.
One of the cool things about cryptocurrency is that it's decentralized, which means that no single person or company controls it. Instead, it's maintained by a network of computers around the world. This makes it more secure and less susceptible to fraud than traditional forms of money.
What is a cryptocurrency wallet?
A cryptocurrency wallet is a digital wallet that you use to store your cryptocurrency. It's like a regular wallet that you might keep in your pocket, but instead of holding physical money like coins and bills, it holds digital money like Bitcoin or Ethereum.
More precisely, a cryptocurrency wallet stores two important pieces of information: a public key and a private key. The public key is like your address, and it's what you use to receive cryptocurrency from other people. The private key is like your password, and it's what you use to access your wallet and send cryptocurrency to other people.
There are different types of cryptocurrency wallets, including desktop wallets, mobile wallets, and hardware wallets.
What is a cryptocurrency exchange?
A cryptocurrency exchange is a platform where you can buy, sell, and trade different types of cryptocurrencies. It's like a stock exchange, but instead of buying and selling stocks, you're buying and selling digital currencies.
You can deposit money into the exchange using a bank transfer, credit card, or other payment methods. You can then use that money to buy cryptocurrency at the current market price.
You can also use a cryptocurrency exchange to trade one type of cryptocurrency for another. For example, you might trade Bitcoin for Ethereum and vice versa. The most popular exchanges in the crypto space are Binance, Kraken, KuCoin, and Coinbase.
How much money do you need to invest in cryptocurrency?
The amount of money you need to invest in cryptocurrency depends on a variety of factors, including the price of the cryptocurrency you want to buy, your investment goals, and your risk tolerance.
Some cryptocurrencies, like Bitcoin, can be quite expensive to buy in full units, while others, like some altcoins, can be purchased for just a few cents or dollars. Still, virtually every crypto asset can be bought in fractions, meaning that you gain exposure to Bitcoin by investing just a couple of dollars, even though the coin has a price of thousands of dollars.
However, it's important to remember that cryptocurrency prices can be very volatile and can fluctuate rapidly. This means that there is a risk involved in investing in cryptocurrency, and it's generally recommended that you only invest money that you can afford to lose.