If you’re reading this, then there’s a high chance that you have heard of all the noise from last week.
- The US SEC sued Binance and Coinbase citing money laundering and illegal operations
- The French Government is also investigating Binance for alleged money laundering
- Binance also had to leave the Dutch market.
- The prices of tokens have been red for weeks (They seem to be picking up this weekend).
- Tether’s stablecoin (USDT) depegged from the US dollar.
To explain the last point, stablecoins are meant to equal USD in value, but USDT dropped below USD.
The last time something like this happened was the Terra LUNA crash where their stablecoin UST went from $1 to 26 cents.
So despite the panic, it presents an opportunity - an opportunity to learn and prepare to buy your first cryptocurrency token.
Today, I want to show you two things;
Let’s begin.
What to consider while choosing a cryptocurrency exchange
To buy cryptocurrencies, you need to find a trustworthy crypto marketplace. These are platforms, websites or apps where you can exchange your fiat money for cryptocurrencies.
There are two types of exchanges: DEXs - Decentralised exchanges, and CEXs - Centralised exchanges. Here I’ll be referring to the latter.
To buy your first cryptocurrency, look for CEX exchanges with
But even more, the best cryptocurrency exchanges have:
It's almost like finding your favourite local market where you feel comfortable buying fresh produce. I’ve used over 7 CEXs based on my needs at the time, but I use 2 regularly.
Next time I’ll outline the process of buying cryptocurrency on those two exchanges.
But now I want to show you how to choose a crypto token to buy.
What to Consider Before Making Your First Crypto Purchase
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Making your first crypto purchase is as easy as ordering pizza online, you'll select your desired cryptocurrency, specify the amount, and complete the transaction. But compared to pizza, with crypto, you have thousands of coins to choose from.
So how do you choose from over 23,000 tokens?
Research
Yes, your favourite Youtuber or Twitter influencer mentioned the token, but what’s the purpose of the token and what problems do they aim to solve.? What technology is backing it? Has it already pumped in price? What is the current market trend? I.e. Is this the time to buy or the time to sell? Also, what’s the growth potential for that token?
By the time you finish answering these questions and DYOR, you should have a good idea of what you’re putting your money into.
Market Cap and Popularity
Consider the market capitalisation of a cryptocurrency, it’ll tell you if people are interested in the coin. Sometimes you want to be early in a coin, but other times, it’s best you wait for many people to get in just to be sure.
Popular cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) often serve as good starting points due to their established track records.
Community and Development
Join the community and assess it. Many projects have Telegram channels and Discord servers where they share information about their development activity first before posting on Twitter or even their website. Check to see that the community members are enthusiastic about the cryptocurrency. Also, check for regular updates and developments by the project team.
A team that doesn’t treat the community well is most likely a scam. Those types of communities would ban you for asking simple questions. Run!
Use Case and Utility
Evaluate the practical use case and utility of the cryptocurrency. Does it offer solutions or improvements to existing industries? Is there real-world demand for its functionality?
Some projects have a high-sounding roadmap that leads to nowhere.
Risk Tolerance
Consider your risk tolerance level. Cryptocurrency investments can be volatile, and prices can fluctuate significantly. Assess your willingness to take risks and invest accordingly. Remember, higher potential rewards often come with higher risks. Just because you have $100 in your wallet doesn’t mean you should spend it all in one crypto token.
There’s a saying “Put in what you can afford to lose.”
Diversification
It's generally advisable to diversify your cryptocurrency portfolio. Consider investing in a mix of established cryptocurrencies and promising projects across different sectors. This diversification can help reduce risks and balance potential gains.
The crypto space has seasons; one time it's AI season, another time it’s DeFi season, next it may be gaming season before it’s memecoin (or sh*tcoin) season. With a diverse portfolio, you’ll benefit from these different seasons.
Professional Advice
If needed, consult with advisors or experts who specialise in cryptocurrencies. They can provide insights based on their knowledge and experience.
Now apply this information to any crypto token you hear of during the week, and note your observations down. Next week, I’ll walk you through the process of getting your first crypto token.
But until then, I remain Supreme
