How to pick a winner in the crypto market

By

September 14 2020
Share

Investors looking to gain exposure to crypto assets are being advised to look at the asset class like they do companies with some coins likely to win while others may fail.

To mark the launch of Revolut's cryptocurrency exchange in Australia, nestegg spoke with Revolut’s head of crypto Edward Cooper, who explained how to choose the right coin to invest in as well as the impact of Bitcoin on the entire crypto market."

“If you look historically, [bitcoin] halving plays out over a longer period of time,” Mr Cooper said.

“There’s usually this mini period of excitement around the halving with volatility spiking up.

“But if you look just historically, those new all-time highs don’t happen during the halving. You just get more press and people not sure what is going to happen.

“It usually takes about a year for all the economic aspects of the halving to pay out. So with the 2017 bull run, that was after the 2016 halving. So if history repeats, the large run will be in 2021,” Mr Cooper said.

However, the crypto currency expert pointed out how Bitcoin’s halving could impact all coins, changing potential winners over the short and long term.

“There’s a difference between a short-term and long-term view. In the short term, when bitcoin, the oldest and most well-known crypto currency, when it goes on a run, it lifts the entire space,” Mr Cooper explained.

Mr Cooper explained historically investors seeking the next Bitcoin are likely to purchase alternative coins if Bitcoin’s halving starts a bullish run for the crypto asset.

“You actually see this rising tide floats all boats, so if bitcoin goes up in the short term, a lot of the alt coins will follow,” Mr Cooper said.

Longer term, however, investors are being told to look at the underlying technology when they are trying to pick a winner in the asset class.

“Long term, I think there’ll be a few different winners. There are thousands of alt coins out there.

“It’s a bit like companies where a lot will fail, but the ones with solid fundamentals, good founding team, strong tech and are actually solving a problem will be the ones that survive and will go on to be part of the finance system,” Mr Cooper said.

Speaking generally, Mr Cooper explained investors shouldn’t try to pick a winner when it comes to crypto currencies, but instead focus on something they believe in on a technical level.

“If you pick something you believe in on a technical level, regardless of what the price does you believe in that product, you’ll get a better sleep at night,” Mr Cooper said.

“So, I would be looking at the quality of the founding team, whether the token is solving a real problem.

“Have a look into the code. Most of these projects you can look at the code, see if it’s a technically sound product. You obviously want a strong white paper.

“There’s definitely clear signs when you have something quite interesting from a technical perspective and when something is a hype.”

“I would be looking at that. I think that is much healthier than trying to pick a winner,” Mr Cooper concluded.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

Most read

Age Pension increase prompts Australians to review their finances

Latest Podcast

Election policies could reshape Australia's superannuation landscape, expert ...

Resources

There is $17.5 billion in lost and unclaimed super across ...

Invest