We are now in the half of 2022, and investors are still searching for the cryptocurrency that could massively grow this year. Bitcoin (BTC) and other digital assets have registered very large price increases throughout 2020 and 2021, but what’s next for altcoins?
During every single bull market, we try searching for some of the virtual currencies that register the largest gains. This is something difficult to do as we cannot predict the future. Moreover, the volatile and speculative nature of digital assets makes it even more difficult for investors to select the most profitable cryptocurrencies.
In this post, we will go through some cryptocurrencies that could explode in 2022. The goal is to understand which are the reasons behind these price increases rather than choosing the correct digital asset. Let’s also not forget that the market has been in a bear trend since November 2021, which makes it even more difficult for investors to search for a possible altcoin investment.
Note that all the information shared by UseTheBitcoin is for educational purposes only. We are not financial advisors. Never invest more than what you can lose and always contact a professional financial advisor. We are not responsible for any decision you make while reading this or any other post.
The first thing you should know about searching for the next fast-growing cryptocurrency is that you would not likely find it unless you are ready to take some risk. Basically, the virtual currencies that register the largest gains are those that have a very small market valuation and that are not known to most investors.
The main question is: how can I know this is not a scam? You have to search for all the cryptocurrencies that you think could eventually skyrocket in price in the coming year. You should read their whitepapers, and create a clear spreadsheet with all their information, and your portfolio allocation.
Although this would not be 100% efficient (not all the coins that you investigate and invest in would grow) it might be possible to invest in some of the most profitable coins in the long term. However, as you can see, selecting and investing in many virtual currencies would not only require time from you but also a large allocation of money, which is something you should carefully analyse.
Some people prefer to invest the same amount of money on different coins while others prefer to add a larger sum of money in virtual currencies they believe could move higher in the future. It is up to you to define your investment strategy. But bear in mind that there is no strategy that will guarantee you a return.
One thing is clear, of the virtual currencies that you invested in, many of them would disappear or would simply fall in price. Others would let you make some small gains. There is still a small possibility that at least one of the currencies would massively grow. But this is not guaranteed, and the risk is very large.
Remember to always diversify your portfolio and add some relatively stable virtual currencies such as Bitcoin (BTC), Ethereum (ETH) or Litecoin (LTC). At the same time, long-term investors should also consider the possibility to add other types of investments, including options from traditional finances.
When we talk about investment strategies, we think not only about a good investment strategy that involves virtual currencies but anything that could help your whole portfolio move higher. Therefore, this involves investing in fixed-term income tools or searching for other types of investment options in the traditional financial market.
Another way to invest in highly profitable cryptocurrencies is by searching for Initial Exchange Offering (IEO) tokens. These are coins that are offered through cryptocurrency exchanges to investors that hold the token of the exchange. For example, Binance Coin (BNB) holders would be able to participate in different IEO that take place on the exchange.
Huobi is another cryptocurrency exchange that would let you participate in different IEOs. The procedure is quite similar: you have to hold the token created by the exchange and you would have the possibility to buy a small number of new tokens released on that platform.
This is possible thanks to the fact that new projects make partnerships with exchanges in order for them to list their tokens. In this way, they get exposure, and access to new investors and exchanges are able to give a clear utility to their coins.
In general, IEOs make large gains as soon as they are released to the market. If you were able to purchase an IEO, then you might have the possibility to sell it higher in just a few days (when the token is officially added to the exchange).
IDOs: An Alternative to IEOs
Initial Decentralized Offerings (IDOs) could also work as an alternative to IEOs. IDOs are very similar to IEOs, with the main difference being the platform that offers you the tokens. While an IEO will run in a centralized exchange such as Binance or Huobi, an IEO will be a great alternative that would be offered through decentralized exchanges.
Decentralized exchanges became very popular thanks to the expansion of the Decentralized Finance (DeFi) market. This provided a great opportunity for developers to create new and unique possibilities for investors to get their hands in the cryptocurrency market. Nowadays, many of these decentralized exchanges are now offering new tokens that have high risk but offer the possibility to investors to search for a winning investment strategy in the long term.
As mentioned before, this is a very risky strategy, even riskier than using IEOs. The reason is related to the fact that there are many DeFi exchanges and a large number of tokens that are being released through these platforms. Hence, you should carefully analyse this possibility and evaluate whether it could be a good investment strategy for your crypto portfolio.
At the moment, it seems very difficult for any virtual currency to become one of the top 50 largest being released through an IDO.
Build a Clear Strategy
It is also very important to have a clear investment strategy that would let you properly allocate your funds on different digital currencies. During bear markets, new projects that would not focus on marketing might launch their tokens and they could be very successful.
Most crypto projects that reached the top 50 and that offered valuable solutions to investors and users worked during negative market conditions. If a project proves to be successful during a bear trend, then it will likely continue to grow during bull trends.
Investors should also know that when searching for cryptocurrencies they might find many projects backed by important figures in the technological, financial, or sports, sectors. Nevertheless, most of these digital assets tend out to be simply marketing campaigns that focus on the short term rather than on long-term and reliable projects.
Investors should also have a clear understanding of investment strategies. It is not the same to invest in a cryptocurrency for short-term gains as searching for a crypto long-term investment alternative. Everything depends on your needs and the targets that you have.
Be Careful of ICO-like Trends
During the bull market of 2017, investors placed their funds on tokens released through ICOs (Initial Coin Offerings). These were fundraising campaigns in which projects sold a token to the market and investors could directly buy the coins they were selling at a discounted price.
Over 90% of Initial Coin Offerings ended up with investors losing money. Indeed, these tokens lost most of their value or simply ceased to exist. While there are still some Initial Coin Offerings out there, this is not the most common method to invest in digital assets nowadays.
Knowing what happened with ICOs, you should then avoid similar situations in the future with other trends that could attract investors. Similar trends could be related to non-fungible tokens (NFTs), Soulbound tokens (SBTs), or any other similar trend that could be based on hype and marketing strategies rather than on fundamentals or a technical standpoint.
Thousands of investors from all over the world lost funds to ICOs during the 2017 bull market in the crypto industry. When 2018 pushed prices lower, most digital assets didn’t recover, and many of them simply disappeared.
So, which cryptocurrency will explode in 2022? It is highly likely that many virtual currencies will be able to explode in 2022. The main goal is to be able to identify them and analyse the market. Of course, investing in digital assets is risky and could be harmful, as you could lose money.
Nonetheless, there are some good opportunities that you could check and decide whether they are suitable to your risk or not. 2022 is getting closer to an end and this could be a good moment to take a position and search which could be reliable virtual currencies for the next few years.
We are getting closer to the end of the year, but are there any possibilities to find new and reliable digital currencies to invest in this fall?