What Cryptocurrency Will Be Your Best Bet This Year?

Bitcoin and other cryptocurrencies have been growing in popularity for some time now, and if you’re thinking about investing, follow the core principles of strategic asset allocation, secure storage, and dollar-cost averaging. There are countless digital assets available, each with different dynamics, and it’s hard, if not impossible, to choose when presented with so many options. If the past is any indicator of the future, investors in Bitcoin are in for an exciting ride, as it’ll continue to maintain a high exchange rate because of its supply, market demand, media/news, and regulatory changes.

In the first quarter of 2024, Bitcoin outshined every other group of investments (gold, stocks, and bonds). The cryptocurrency’s success lies in its finite supply, enforced through a combination of mining and the halving process, which occurs every four years, resulting in a lower block reward. Satoshi Nakamoto designed BTC to imitate the natural scarcity of gold, so the number of coins in circulation will never exceed 21 million; it’s unlikely it’ll ever reach that number. Spot ETFs offer a seamless way for investors to gain exposure to the price of Bitcoin without having to venture into the technicalities of blockchain technology.

Exposure To Bitcoin Can Help Hedge Against Inflation and Diversify Your Portfolio

Protect yourself from the total collapse of your holdings by going with a more established name. The BTC price prediction indicates that the value of the cryptocurrency will increase by 5% and could reach $87,508 by 2030, which reflects the bullish sentiment among investors, who anticipate an uptrend. What’s also interesting is that spot Ethereum ETF approval could lead to increased buying activity on both centralized and blockchain-based exchanges, benefiting all investors. Irrespective of what happens, Bitcoin will remain popular with investors over the next decade; it’s just we don’t know where the next price catalyst will come from.

While inflation is down and on target, the past couple of years have left prices much higher than they were, so there’s no better time than now to evaluate your portfolio and add an inflation hedge. BTC, which still dominates the cryptocurrency world, is on its way to becoming a stable, long-term asset, and its hard cap of 21 million could make it an even more attractive investment, leading to its increased adoption as a hedge against inflation. The limited supply translates in the economy into the fact that greater demand will drive prices up – it’s what’s called the law of supply and demand.

You can own a single asset, but it’s unreasonable to expect it to perform better than a portfolio of diversified assets, even if they’re not perfectly correlated. Diversification can lower your risk because different cryptocurrencies perform well at different times.

BTC moves differently compared to stocks and bonds, which can be an advantage when those markets experience a sharp decline. Before investing, take as much time as you need to educate yourself on the technology, risks, and potential rewards, and stay up to date with the latest news and developments within the cryptocurrency sphere.

Analysis Is a Great Way to Separate Trading from Gambling and Guesswork

Any given moment plays an important part in the market’s perception of Bitcoin’s outlook, so it’s paramount for traders to interpret market dynamics and forecast future price movements. You can predict cryptocurrency prices by using:

Technical Analysis

Technical analysis involves studying past market data, mostly price and volume, to pinpoint bullish or bearish price movements so you can make informed decisions and keep your emotions in check. Examine bar charts, line charts, and Japanese candlesticks to understand the current market sentiment and navigate the volatile landscape of cryptocurrency intelligently. Candlestick charts reveal the highest and lowest price points while illustrating the opening and closing price in your chosen timeframe – green means the price ended the day higher than it opened, while red means it ended the day lower than it opened.

Fundamental Analysis

Fundamental analysis takes into account all the information available about a digital asset, so you’re essentially asking the question: What’s it really worth? Most importantly, you follow up by asking: Does the current price reflect this? If you want to dig into BTC’s fundamentals, its whitepaper is a good place to start because it’s where you’ll find the project’s vision, goals, and details about blockchain technology. Some altcoins have been promoted as having better features than Bitcoin, but consider the development team, underlying technology, and the provided utility.

On-Chain Research

On-chain research involves observing the flow of funds within the blockchain to determine investment opportunities, which isn’t that hard to do given the blockchain’s transparent nature. You can check the history of transactions in real time. Get a grasp of who’s holding and trading, how sophisticated actors are in positioning their portfolios, and the way token holders react to market events; there are platforms and tools that simplify the process, converting the raw data into useful insights. Glassnode, for instance, empowers investors to anticipate major trends and inflexion points moving digital assets.

Market Sentiment Evaluation

The overall mood of investors about Bitcoin or the cryptocurrency market as a whole can reflect optimism or pessimism, which is most evident in price trends.

The Fear and Greed index offers an overview of the current sentiment in the cryptocurrency market, meaning it’s helpful as a prediction tool: extreme fear lowers prices, while extreme greed leads to higher prices. The index is calculated using various signals, such as volatility, market momentum/volume, social media, dominance, and trends. Knowing the overall market sentiment and emotions leads to better investment decisions that add value to your life.

Conclusion

Despite its high volatility, Bitcoin continues to comfortably outperform the S&P 500, so if you’re looking to build a portfolio for the long haul, it should be your number one pick, as it offers high potential returns, a secure platform, and a high trading volume. Ethereum is considered the best alternative to Bitcoin, and judging by its performance, it’s not hard to understand why. It recently crossed $3,500 as the SEC finalized its investigation. Ethereum is a security, not a commodity, just so you know.