How to choose the best cryptocurrencies of 2021 to invest in?

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The crypto market is experiencing a new rise and people are looking for ways to choose the best cryptocurrency of 2021 to invest in. Many cryptocurrencies have reached new all-time highs, and mining has regained such popularity that it provoked a shortage of video cards around the world.
The 2020 effect only intensified in 2021. The crypto cap in the first days of 2021 was able to overcome the $1 trillion and is now about $2 trillion. And this is only for the first quarter of 2021. Amid widespread interest in crypto, a lot of newcomers and experienced traders are trying to figure out where to invest to get the most benefit.
Of course, if there was the only correct and easy answer to the question of which cryptocurrency to invest in or which method to follow, then everyone would abuse this way. In this case, the market would quickly adapt, and then this approach would be less effective. Here are what to consider before choosing your best cryptocurrency for 2021.

Look at retrospective but don’t rely much on it

Before thinking about 2021, let’s take a look at 2020. If you start researching articles about “the most profitable cryptocurrency to invest in 2020” published early last year, you will most likely find the most popular cryptocurrencies there.
Major cryptocurrencies have large liquidity, they are available on most exchanges and can be purchased quite easily and conveniently. They are great for beginners who are just starting to discover the world of cryptocurrencies, and also show a decent return. For instance, Bitcoin and Ethereum surged by more than 400% in 2020, NEO coin — 100%, Cardano — by more than 500%.
However, these are not the most profitable cryptocurrencies in 2020 in the context of investments. Cryptocurrencies such as ZAP, AAVE, and STC skyrocketed by more than 6000%, 5000%, and 3000%, respectively. You are unlikely to find these coins in guides a year ago since such growth is usually considered unexpected.
It is important to note that a coin’s past performance does not guarantee the same in the future. Predominantly, altcoins that show such explosive growth can be called a one-day wonder. Leading cryptocurrencies can show strong growth over a long period. Therefore, the profitability also depends on the term of investing.
Some crypto enthusiasts point out there are cryptocurrencies like Bitcoin that have a kind of cyclical nature. Over its more than 10-year history, the Bitcoin price has demonstrated that it experiences a rally for 1-1.5 years after the halving. Then the period of deep correction goes for 1-2 years. After that, there is an accumulation period that lasts for 0.5-1.5 years and the price consolidates in a certain range. And then a new halving happens.
However, as stated earlier, even if we take into account that the cyclical nature of Bitcoin at the moment looks reasonable, this does not guarantee that the cycle will not be broken.
Retrospectives can be useful at assessing the current state of an asset and its potential, but it is not always a good option for choosing the most profitable cryptocurrency.

Follow the crypto trends to find your winner

If top-10 cryptocurrencies don’t suit you and you want to find your crypto gem, then you should keep a close eye on developments in the crypto industry.
In the short term, little-known and new coins have the best growth potential, and hence profitability. The reason is simple — low liquidity. For instance, Bitcoin needs relatively significant interest among market participants and a large number of funds to increase by 20% but it may take much less effort to jump 100% for a less known coin.
So, if you see that some coin has surged by hundreds of percent, this does not always mean that it has a promising technology or that everyone has started to use it. Low liquidity can both send the coin to the moon and the seabed.
When trying to find the best cryptocurrency among little-known coins, one should not forget about the risks and the fact that the coin can greatly fall in price. Coins like ALEPH and KIMCHI lost more than 99% in value in 2020. Besides, if you follow the events in the cryptocurrency industry, you can find a winner among major cryptocurrencies as well.
Choosing the best cryptocurrency depends a lot on your approach. When trading, you should pay attention to the liquidity and volatility of the asset, when investing — to the project technology and its prospects. If we talk about mining, then the cryptocurrency price is only one of the factors for assessing profitability. The investment term and the way to benefit from cryptocurrencies are key in choosing the best cryptocurrency for 2021.

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