If crypto markets have proven anything, it’s that the hype of “the next big cryptocurrency” can create a very lucrative investment opportunity. Many of us viewed this first-hand with the rise of Ethereum, as well as dozens of other major innovative cryptos like Ripple, Monero, Stellar, Vechain, etc. As you can imagine, catching any top-50 crypto prior to the coin’s rise to notoriety status can give you a wicked chance to realize a major profit.
The ROI might not sound great during the drug-out bear market of 2018, but as doom is at its peak – the biggest opportunities are hiding in plain sight. We challenge you to discover the coins with the greatest potential to blow up in value as the market reverses its course. We’ll also gear you up with all you need to know to help discover these trading opportunities.
Locating the Next Big Cryptocurrency
Step 1 is finding cryptocurrencies worth evaluating and seeing their potential value as a mid to long-term play. We are not looking at day, scalp or swing trading opportunities right now. We want to focus on coins worth buying and holding for a shot at a 10 to 100 times increase, within 1-3 years max.
That said, let’s look at some ways to narrow down possible cryptos to invest in. We’ll also go over what you should do to properly evaluate them and decide whether they deserve your attention—and potentially your investment—as you move forward.
Check Coin Market Cap Websites
First things first, we can always evaluate by market cap as this is an easy way to identify the likely “multiplier factor”. If the total market capitalization of a cryptocurrency is only $5 million, any sizable investment can easily send its valuation straight up.
Some popular crypto market cap websites include CoinMarketCap.com, WorldCoinIndex.com and TotalCrypto.io – the details, filtering options and visual aesthetics vary by site. We suggest you do not overthink on what such a site offers; you merely want to use these sources as a way to find coins that might be undervalued and then learn more about them somewhere else.
You also do not need to go to market cap websites directly from the jump. You can find coins through different sources, confirm their perceived value and then check their market cap stats on one of these sites. That way, you don’t get stuck in the wrong train of thought and you always sell yourself on the concept/value of the coin before seeking an answer to “how rich can this coin get me?”
Browse Crypto Sub-Reddits
We recommend /r/cryptocurrency as a first option. This sub-Reddit has less pump-and-dump oriented talk and purely serves as a source for recent coin news and talks. You find more civilized discussions and development related news on there. Filter the results to “Top” and check daily; you can sift through top posts from the past month or year if you want to see what else might be worth tracking that’s currently under the radar.
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Some other sub-Reddit sections you might want to check include /r/ethtrader and /r/bitcoin. After you spot an intriguing crypto project, check for that coin’s sub-Reddit (if they have one) and start following it regularly. Also, make sure you subscribe to the active social media channels of any crypto projects that take your interest.
Look at Crypto News Sources
We recommend sticking to legitimate crypto news sites like CoinDesk.com and CCN.com for all of your information. Our industry is unfortunately full of fake news and media put out because of hidden intent.
Besides checking the news outlets – find the news before it happens. You can view all the upcoming events for major crypto projects at CoinMarketCal.com and keep track of what’s to come. Sometimes you can get in before a project’s hype gets to take shape, such as by buying a promising cryptocurrency before it first takes the spotlight at Consensys.
What to Avoid When Hunting New Investments
We also want to cover a handful of rules to follow for what to avoid doing when looking for hot crypto investment opportunities. It’s just as important to evade making these mistakes; you don’t want to get caught up in the hype when it’s too late, overpriced or unjustified. Save yourself a potentially significant monetary loss by fool-proofing your investment hunting skills.
That said, below are some tips to follow…
- Don’t fall victim to people hyping crypto projects. Do your own research and make your own judgment. Gone are the days of looking up the best new altcoin investments in Youtube; real legwork is required if you are going to find the next big crypto before it takes off. So, stay out of the trollboxes and don’t hold weight to the alluring claims mentioned in threads like “Daily Altcoin Discussion” on Reddit.
- Stay away from coin forks. You are not ahead of the curve by investing in a coin that results from a hard fork. Unfortunately, everyone that held the original coin will also have access to the same balance in the newly forked coin. Thus, there is very little upward pressure even when there appears to be buying demand. Avoid the hype as, chances are high that, the whales are selling on the way up before the value drastically plummets.
- Steer clear of coin-saturated projects. Sometimes we see a great crypto project fail to build a thriving ecosystem around its supporting currency. When a project adds additional coins to the mix, such as STEEM Dollars + STEEM Bucks, it obfuscates the buying interest because it’s too confusing. Some projects even abandon the effort of building utility in their primary coin, such as how Digix DAO did which resulted in its price falling from over $500 to under $15 since their new currency released.
- Keep away from micro-niche coins. Yes a gaming currency sounds great, but do we really need GameCredits, EnjinCoin, Decentraland, FirstBlood and so many others? It doesn’t matter if the coin is used to register and exchange digital goods in a game, or used to gamble on your virtual gaming performance – all of these concepts are negatable with the right ETH-based implementation. They are simply not big enough opportunities, especially in today’s crypto market where utility is valued over hype.
- Never fall in love with team credentials. Once upon a time, your crypto project would pump “to the moon” if people found out a former CEO for a major corporation was on board. Nowadays, way too many over-qualified individuals are working in the crypto space. You will find endless examples of this in coins with sub-$5 million market cap cryptos.
Many other mistakes should be avoided as well. However, nothing is more important than understanding market sentiment. Trading opportunities that were once appealing are not necessarily that way now. Read up on our take on buying coins for their news-based pumps to understand how crypto investors operate differently now.
How to Pick Future Winners During Bear Season
Let’s go over some questions you can ask when evaluating various altcoin projects. These questions should help guide you to better understand what to look for in a truly valuable cryptocurrency.
Without a doubt, as 2018 comes to an end – most cryptos look dead as their price lulls and drops continuously. Market momentum will return for the coins that deserve it, but many will remain dead and not be worth investing in; weigh these questions when making your decision on which outcome is most likely.
Why did they crash? Did the fundamentals change?
Was the only reason for the coin’s price crash because the market as a whole went down? If not, what else is at play here? Sometimes a change in fundamentals will drive a price down further and ultimately suppress its future performance. For instance, Ethereum no longer holds value for its first major use case (as an ICO platform) which has caused a reversal in the speculative pressure it caused, previously to the upside.
The coin itself might still work the same on a fundamental level, but the speculative fundamentals are entirely different. Just like how Bitcoin rose as block rewards halved (due to less coins flooding the market daily), the increase in traded ETH from ICOs selling out has greatly changed market dynamics for the worse—because the supply started to outweigh the demand. Add the fact that fewer ICOs are launching, which means less ETH is getting locked up than before, and you have a catalyst for for price disaster. As such, it is not too surprising that ETH dropped much further and faster than Bitcoin has so far.
That said if a coin’s speculative and technical fundamentals are unchanged… Their growth potential is unhinged and a solid ROI merely takes a market turnaround and further progress in the coin’s project. That said, it’s important to consider that more variables will be “priced in” when the next bull market takes off.
Where did they stand before crypto crashed? Was it a hype train in the making?
The big red flag that most alts signal lately is the sharp drop in market cap. We will use AirSwap (AST) as an example here. The market cap of this cryptocurrency went from a high of $250 million to falling below the $4 million mark over the past year. This price drop is much greater than what we have seen by even some of the more-hyped cryptos.
However, what we notice is potentially a powerful indicator for spotting a future bullish coin. The price was healthy in the $25 to $50 million range prior to its rise. Solid news came through to increase overall interest. Suddenly, everyone was buying but the whole crypto scene crashed and AST only resisted for so long.
This coin is one of few that managed to pump during Q1 of this year when most coins were merely dragging down alongside Bitcoin. Another good example is Ambrosus (AMB) which holds utility (as a coin designed to power a global supply chain platform). This cryptocurrency also gained popularity earlier this year and roughly quadrupled in price from January to May, even while Bitcoin and most alt coins were crashing down. AMB’s market cap of over $120 million at the time is now a dismal $8 million.
The thing is, with these coins at least – the prices were already low before their projects received attention from the entire crypto market. A small number of investors were accumulating at this time. If these coins experienced their price performance six months sooner, they would undoubtedly hold a much higher market cap right now.
While no one strategy is guaranteed to work, siphoning the most-promising alts from right before all of crypto plummeted this year is likely an effective way to find future winners. Even if the project doesn’t reach the notoriety of a top-25 coin, fewer investors are waiting for prices to recover to recuperate their original investments – a factor that will certainly suppress some larger alts as the crypto market recovers.
-> What are they about? What makes them special?
You should have an answer in your head to these questions after only a little bit of research. What if it’s not obvious what the inherent and unique value of the project is? If that’s the case, the project is either not actually valuable or the coin’s purpose could easily be fulfilled by another crypto. You simply do not want to invest in a coin that could become obsolete down the road.
Now, more than ever, coin investors fear “what if someone just throws this project on Ethereum?”, which is something you have to calculate against when deciding which project is worthy of your investment capital. Seriously, blockchain interoperability is a real thing you need to be concerned about when contemplating any crypto investment.
AirSwap has expanded past being nothing more than a basic crypto DEX. Yes, the AirSwap platform makes it possible for crypto holders to instantly swap various coins at a fair rate. It also gives big investors the opportunity to provide liquidity without giving up custody. Their platform features no order book and their exchange does not take custody of your digital currency.
That’s great, but one more question to decide if we should buy and hold now or soon…
-> What impactful developments or news is on the horizon?
If altcoins reversed to bullish tomorrow, next month or next year – what developments or news would you see releasing under the same timeframe from this crypto project? Another great question to ask, of course—because if you can’t see the valuation massively shooting up, you simply won’t succeed in these markets.
Some examples of impactful developments include: a decrease in block reward, a new utility-based purpose, use case adoption and a freshly introduced staking or masternode style incentive scheme. We suggest you refrain from valuing pump-like developments, which would include most partnership announcements and other one-off positives.
First Impression – Coin Types & Value Calculations
We believe it’s important to introduce you to the main types of cryptocurrencies that are “in demand” in today’s market. We’re dealing with a bear phase that could extend for a while longer. With so many cheap altcoins up for grabs, we’re comfortable recommending a few certain types of coins because of their justified growth potential.
We want to identify with coins that are likely to face supply issues if their project is successful. These types of cryptocurrencies increase in value naturally because of this factor – not just because everyone decides to buy and hold in anticipation of a price increase.
With that said, the main types of coins with inherent value include: 1) cryptos with masternodes, 2) decentralized exchange coins and, 3) developer platform fuel tokens. We’ll assess each of these three categories below to give you a better feel for what to look for in each.
1. Cryptos with Masternodes
We saw the masternode concept rise in popularity thanks to DASH. The best masternode coins generate you income from your long-term investment. There is great value in obtaining a masternode early into a coin’s life as the total cost of setting up your node will be pretty affordable. Many investors are seeing 25-75% returns within a year, purely based off of their masternode returns.
You can check Masternodes.online for information and profitability stats on all the different cryptos that offer this staking feature. Narrow down your options by looking with the following parameters:
- Market cap must be sizable ($3 to $5 million or more is a good start)
- Trading volume must be reasonable and consistent
- Masternode worth (cost) must not be a barrier to entry
Alternatively, treat masternode coin investing as a way to catch a bigger position in a promising project from its earliest days. Look through the list of masternode cryptos and sort by their worth to see what interesting projects have affordable masternodes right now. If you think they are worthy of a long-term hold, investing in a masternode could pay off much more in the long run. The problem is that the entry cost could serve as a barrier for many beginners and setting up the node will require some technical understanding.
2. Decentralized Exchange Coins
Cryptocurrencies used to power decentralized exchanges are hot commodities, especially with the impending growth of these DEX platforms. The real opportunity comes when you get in early on a DEX platform coin. The upside potential is massive here. However, the coin you invest in needs to support a decentralized exchange that will be largely utilized.
The best example of a successful DEX exchange crypto is Binance Coin (BNB). This altcoin was introduced to an already-large trading platform. Therefore, we have both use case and adoption pretty much “in the bag”. Needless to say, it’s understandable why BNB ranks on top as a the most-valuable DEX coin right now.
However, the market is looking for successful DEX platforms to take off. Any coin powering a future success will be a great investment now. If, for example, AirSwap manages to take over the digital asset exchange world—the current ~$4 million valuation would be a drop in the bucket of what the project is worth once the platform is widely adopted.
Also, it’s important to note: decentralized exchanges are not just currency/coin based trades upheld in a decentralized fashion. You also have exchange platforms like PowerLedger, which is a decentralized energy trading platform. These cryptos have direct use cases and can be very valuable if the project takes off—however, their ceiling is a bit capped due to their niche characteristics.
3. Platform Fuel Coins
Development platforms like EOS, Ethereum, IOTA, Lisk, NEO and OmiseGo all allow for developers to build projects and smart contracts from within. The way these platforms work varies but one common trait applies: a cryptocurrency is used as “fuel” to keep the system running.
The reliance on these fuel coins will vary by platform, but generally the more adoption the greater the demand will become for non-traded coins. Thus, the speculative traders are throwing around a smaller pool of coins versus the actual supply. The limited quantity and true utility will definitely lead to a major increase in value, rewarding any long-term holders in the process.
We have many bargains at the moment. However, these particular blockchain platforms are truly trying to compete with Ethereum. Some might do well in the future, while others will fade into obscurity. Most come with already “reasonably high” market caps, making them harder (but often safer) investment shots for anyone desiring a 10x growth or higher.
Altcoin Market Trend Analysis
We have seen a few different altcoin market trends over the years. After escaping the 2014-2015 Bitcoin bear cycle, and as altcoins gained bullish fuel, alts had an inverse relationship with Bitcoin. We would see other cryptocurrencies go up when Bitcoin is down, and the opposite take place when BTC pumped up.
The great bull run of 2017 was all focused on ICOs and hot altcoin projects. The trading community as a whole became infatuated with trading altcoins (and rightfully so), which lead to a tremendous amount of upward pressure. Alts began to rise with BTC, as the whole crypto world realized its substantial growth. In fact, they outperformed BTC overall as we can see from this market cap dominance chart:
This chart indicates that the overall market capitalization of Bitcoin drastically dropped last year. More money flowed into alternative crypto projects at this time. The change was partially due to so many new coins coming to the market, especially cryptos from big ICOs. However, altcoins across the board rose dramatically as Bitcoin made its steps up.
The trend reversal after BTC’s December 2017 peak was a pivotal point for speculators. In hindsight, it was a moment where the market shifted authority back to the crypto king: Bitcoin. We saw the dominance share revert back toward its position, recapturing most of the capitalization it held before last year’s parabolic bull moves. Below is a look at how the dominance chart changed after the 2017 crypto bubble popped.
Now, with the 2018 bear run… We are seeing alts drop alongside Bitcoin. Many are falling at a faster rate and very few are resisting at all. The greater velocity on the way down for alts has influenced BTC to take back much of its market share. Rightfully so, given how many alts were so overvalued simply because of the general crypto hype.
We’ve seen plenty of days where prices fell by 30% or more. The descending triangle pattern that Bitcoin showed when we artificially bottomed around $6,000 was also found in many altcoin projects. Many large investors hold baskets of top cryptocurrencies, which has certainly influenced a value correlation across the board. However, it’s not just the market makers – this psychological connection is hard to shake.
Just take a look at the price charts for many of the larger cryptos – you will notice their price movements are very similar. In particular, the majority of larger altcoins have reversed from their uptrend peak and capitulated to prices not seen since the start of last year’s run-up.
Pro Tip: Avoid using one single parameter for evaluating altcoin price changes. Their relation to Bitcoin and crypto sentiment is not necessarily going to be identical. Only so much bearish momentum can sustain; as an example, Ethereum is currently down under $100 after a $1,400 peak but its ratio versus Bitcoin is also down substantially. These suppressed coins can form a sentiment coil at their bottom and easily move 2-4x while Bitcoin makes a smaller upward correction as the tide turns.
Where Will Altcoins Head in 2019 ?
It’s fair to assume that many of the larger, legitimate crypto projects with active communities and ongoing developments will be just fine when the wheels reverse. The market cycles don’t change; once Bitcoin bottoms out, all that will be left is buying demand and the price will wedge and spike upward. We expect to see the same with legitimate altcoin projects as they’ve been bleeding alongside Bitcoin all this time.
Outside variables can certainly make an impact. For instance, futures markets and other entry points for big investors can attract fresh demand. Valuations could easily rise much higher for certain alts, especially in the case of utility tokens that prove useful and are adopted at scale. We can see paradigms similar to the one reached from Ethereum’s wicked ride up as ICOs brought true use/utility to the ETH token.
Predicting Future Trends – Warning!
The interoperability of cryptocurrencies make them fungible to an extent. We don’t have supporting premise to justify that every type of crypto development is worthy of its own blockchain. Far too many projects are manageable purely under Ethereum, and eventually via Bitcoin’s “Rootstock” (the ETH smart contract equivalent). Unfortunately, far too many altcoins with great projects overall are too fungible and that’s what traders must avoid in today’s market.
What exactly does this mean?
A coin that was once worth 20x might not ever recover to anywhere near that level, even when the crypto market returns to bullish sentiment. The prior valuations were very hype-oriented and traders discredited many realities. Traders perform TA and use historical valuations to chart price predictions for the future – if you’re not careful, this tactic could be toxic. In crypto especially, the saying “the past doesn’t dictate the future” is especially true.
We foresee a rise in the value of altcoin projects with true fundamentals and use cases. These cryptos will be the ones that present opportunities for tenfold growth. Many other coins will likely fade away, or have their projects replicated or transferred over into a development-based blockchain system like Ethereum.
Also, it’s important to note that we now have many fiat-based trading pairs. Crypto traders no longer have to hedge a falling Bitcoin price by holding an attractive altcoin. With more people able to hop to cash, versus picking their favored alt project, we see less bullish pressure on the altcoin market as a whole.
Let’s not forget, while the volume of crypto traders is greater – we do have thousands of more coins to choose from now versus just a few years back. This variety is negatively impacting as it holds back parabolic price movements. Simply put, do not bet on history repeating itself. However, if “the next Bitcoin” is unanimously selected, the price rise will be meteoric and historical.