The NextAdvisor Investability Score gives crypto investors a comprehensive view of a coin’s performance. We consider nine general factors covering nearly 30 unique data points — grouped by performance and trustworthiness — to score each coin between 0 and 100. For a dynamic and representative score, we use the top 85 cryptos by market cap as a basis for comparing performance.
We measure a coin’s performance based on the following:
We measure trustworthiness based on the following 23 criteria:
Cryptocurrency pricing data can help investors find opportunities in the market and make more informed investment decisions. NextAdvisor’s price tracker shows historical price, trading volume, market capitalization, and other important metrics for investors, especially those who are just starting to dip their toes into crypto investing.
While everyday investors probably don’t need every last bell and whistle to make informed investment decisions, there are some generally applicable key crypto metrics and indicators worth considering:
Price: As with any investment, price is where it starts and ends for investors. Pricing is highly volatile in cryptocurrency, but viewed over time can give investors an idea of how a given coin’s value has gone up (or down) over time.
Market Capitalization: In general, the higher the value of the market cap the safer the investment. Market cap is the total value of a cryptocurrency, and is calculated by multiplying the price of the cryptocurrency with the number of coins in circulation. The amount of tokens or coins circulating can be viewed as an indicator of a coin’s demand.
Volume: Higher volume typically means a given cryptocurrency has more market liquidity, meaning more ability for investors to sell an investment when they want to realize a profit. It represents how much crypto is bought and sold over a period of time, typically 24 hours.
If there’s one cryptocurrency you should know about, it’s bitcoin.
It’s the original and most valuable cryptocurrency by far, despite its huge — and normal — swings in recent months, ranging in value from less than $20,000 to more than $60,000. Bitcoin has also seen a surge of new investors, with more than half of all current bitcoin holders having bought in the past year.
“I invest in bitcoin for three reasons: One of them is that the supply is limited, the second is decentralization, and third, it is a category king,” says Kiana Danial, author of “Cryptocurrency Investing For Dummies” and an investing expert. “Everybody knows about bitcoin and immediately gives it this value.”
Bitcoin was created in 2009 by an anonymous figure under the pseudonym Satoshi Nakamoto to function as an electronic peer-to-peer cash system, but has since attracted investors who view it as a store-of-value currency, sometimes described as digital gold. Bitcoin set the stage for blockchain technology and decentralized finance.
“Bitcoin by nature doesn’t really solve a problem,” says Danial. “It was just a showcase for decentralization.”
Based on those principles, the cryptocurrency market — which now consists of thousands of cryptocurrencies — has grown to a valuation of more than $2 trillion. While bitcoin has the longest record for investors to consider, it’s no less volatile.
Bitcoin’s price plummeted in November following the collapse of FTX, previously one of the fastest-growing crypto exchanges in the world. After an acute liquidity crunch, FTX filed for bankruptcy on Nov. 11, which sent the market reeling.
Bitcoin has slightly recovered from November’s crash, but prices remain low. The token reclaimed $17,000 last week and has held steady there throughout the week. The token sits at the midway point to $18,000 as of late Thursday afternoon. Although crypto prices are further recovering this week, the fallout from the FTX implosion has been intense.
BlockFi, a major crypto exchange and lender, filed for bankruptcy and Genesis Global Trading, the lending arm of crypto platform Gemini, says it’s working to stay afloat and avoid a bankruptcy of its own. Regulators are now looking at the crypto industry more closely, as the SEC charged FTX founder Sam Bankman-Fried with fraud earlier this week.
Experts can’t say for certain whether this market meltdown will prolong the current “crypto winter,” but these recent bankruptcies have probably deepened the price lows we’re seeing this year.
Aside from the recent string of bankruptcies, economic uncertainty has soured market sentiment this year. By extension, that has kept the price of bitcoin low. Up until FTX’s bankruptcy, the token was steadily climbing back up. Despite that small and brief uptick, bitcoin has lost more than 70% of its value since its all-time high above $68,000 in November 2021. The token’s high point of the year so far remains in the earliest days of January, when it nearly hit $48,000.
Here’s how its current price compares to its daily high point over the past few months:
So what should crypto investors do in light of this volatility? Nothing, according to the experts we’ve talked to. Given crypto’s history of volatility, this increase doesn’t guarantee a long-term reversal. Bitcoin’s price is just as likely to fall back down as it is to continue climbing. The future of cryptocurrency is sure to include plenty more volatility, and experts say that’s something long-term crypto investors will have to continue dealing with.
Bitcoin has shown as steady a rise in value over the years as any other cryptocurrency on the market, so it’s only reasonable for bitcoin investors to be curious about how high it can ultimately go.
Conservative predictions of bitcoin say the cryptocurrency will reach $100,000 by 2023, but more bullish crypto enthusiasts say $250,000 isn’t far from sight. Big financial institutions have made their own predictions as well, with JPMorgan seeing a long-term high of $146,000 and Bloomberg saying it could hit $400,000 by 2022. A recent study by Deutsche Bank found that about a quarter of bitcoin investors believe bitcoin prices will be over $110,000 in five years. Because bitcoin is so new, price predictions are mostly informed speculations.
Bitcoin is a good place for beginner crypto investors to start, according to the experts we’ve talked to. But you shouldn’t invest in bitcoin just because others are doing it. More than anything, know what kind of investor you are and buy bitcoin only in a way that works with your long-term investment strategy.
If you’re investing in bitcoin, expect volatility. Just like you shouldn’t let a price drop influence your decision to buy bitcoin, don’t let a sudden price increase alter your long-term investment strategy. Even more importantly, don’t start buying more Bitcoin just because the price is rising.
Investors should continue to hold and not worry about the fluctuations. No matter if crypto is going up or down, the best thing you can do is to not look at it. Set it and forget it like you would any traditional long-term investment account. If you let your emotions get in the way, you could sell at the wrong time, or you might make the wrong investment decision.
If you’ve incorporated bitcoin into your investment portfolio, here are some steps you can take to protect it:
There are some common red flags in crypto — similar to classic money wiring scams and credit card fraud — that you should keep an eye out for. They include:
Another way to protect your bitcoin is to implement good digital security habits, similar to how you’d handle large sums of cash by putting them in a safe or FDIC-insured savings account. Experts say small-scale investors with a few hundred dollars in bitcoin are probably OK keeping it on a mainstream exchange like Coinbase. But if you have a significant amount of bitcoin, you can incorporate a crypto wallet for additional safekeeping. There are two types of crypto wallets: hot wallets and cold wallets.
Hot wallets are used to store crypto online. They are secure, but more susceptible to hacking than cold storage, which is when you store crypto offline on a piece of hardware. Think of cold storage as kind of like a safe in USB-drive format. It’s more secure, but if you forget your password or lose the device, you could lose access to your money forever.
Because crypto held in hot wallets is not FDIC-insured, you’ll want to make sure that whatever platform or wallet you store your crypto in has robust security measures, including:
You only get one unique key to access your wallet, which means you need to be extra careful about not losing your key or having it stolen. Don’t share your private key with anyone, just like you wouldn’t share your Social Security number or your debit card PIN. Maintaining strong passwords that you update regularly and not using the same password for multiple accounts will make you less vulnerable to hacks and scams.
Report fraud and other suspicious activity to whatever crypto exchange you used to complete the crypto transaction and to the following bureaus using these links:
Once you’ve learned the lingo, accepted the risk, and met your other financial priorities, you’ll need to actually buy in. The process for buying bitcoin is the same as the process for buying any other altcoin.
First, you’ll want to choose a cryptocurrency trading platform to exchange your U.S. dollars for bitcoin or other digital currencies. Depending on the exchange you choose, you may need to provide information like your Social Security number, ID, and your source of income when you create your account. Once you’ve created your account, most exchanges will ask to connect your bank account or a debit card. That way, you can fund it with fiat currency, like U.S. dollars, to buy bitcoin. Once you’ve connected a payment method, you’ll be able to actually place your order for bitcoin. This process can differ depending on how advanced the exchange is.
Generally, if you’re using a beginner-friendly platform like Coinbase or PayPal, you can simply enter the amount in dollars you want to trade for bitcoin, and buy at the current rate (after accounting for any fees). If you use an exchange designed for more active trading, you may have the option to place both market and limit orders.
Lastly, make sure your crypto is stored safely. Many exchanges let you to leave your investment within your account, which is easiest for most beginners. But if you want to further secure your digital assets, you can transfer them into a hot or cold wallet.
There are hundreds of cryptocurrency exchanges you can use to buy crypto online, but a few of the more popular ones are Coinbase, Gemini, and Kraken. These exchanges are online platforms where you can buy and sell cryptocurrencies.
You can narrow down your search for the right platform by mostly paying attention to security and fees. If you plan to keep your crypto on your account with an exchange, make sure you choose an exchange that uses offline, cold storage, and has strong protections against theft. Some exchanges also have independent insurance policies to help protect investors from potential hacking.
Exchange fees can vary greatly, and may be applied as a flat fee upfront or as a percentage of your trades. Fees can be based on price volatility, and many are charged per transaction. While fees should definitely be a consideration, experts say you also get what you pay for, especially when sticking to the bigger, more established exchanges like Coinbase. If an exchange has more protections, better security, or other features that are important to you, it may be worth slightly higher fees.
Cryptocurrency exchanges are a dime a dozen, but there are only a few we think make sense for crypto investors. The volatile, speculative nature of cryptocurrency investing presents risks for investors no matter how and where you buy it.
That’s why the safety of your investment should be a top priority when choosing a cryptocurrency exchange. The cryptocurrency exchanges that have been around the longest are usually a safer bet than newer ones. Here are our picks for the best crypto exchanges:
Bitcoin has a much more extensive track record compared to other cryptos, though it’s still in its relative infancy compared to the 200+ year history of the U.S. stock market.
Bitcoin was created in 2009, with its first price being $0. By 2010, bitcoin’s first “big” jump happened. The price rose from a fraction of a cent in the spring to $0.09 by July. Very few people, except for very niche tech experts and finance enthusiasts, knew enough about bitcoin to buy the currency.
Bitcoin broke $1 in April 2011, entering its first mini “bull run” and rising by roughly 3,000% over the next three months. By November 2011, the price bottomed out again at $2. Bitcoin didn’t bounce back in 2012, finishing the year between $13 and $14. By November 2013, bitcoin broke $1,000 — then the price dropped dramatically by December to around $530. Between 2014 and 2016, bitcoin’s price was largely stagnant.
But thanks to media coverage and the steep rise in bitcoin’s price, the crypto industry started to take off between 2017 and 2019. At the start of 2017, bitcoin finally broke $1,000 again and kicked off a bull run phase. Prices doubled to $2,000 in mid-May and then skyrocketed to over $19,000 by December. By the end of 2019, bitcoin’s price was back down to $7,200.
At the start of 2020 when the coronavirus pandemic shut down the economy, bitcoin’s price started to accelerate in its upward climb. By December 2020, bitcoin’s price had increased by over 300% since January. The year ended at a price of about $29,374 — the highest it had ever been.
Bitcoin continued to grow in 2021, doubling its value. Bitcoin skyrocketed to an all-time high over $64,000 in the first half of 2021, then just as quickly fell back below $30,000 over the summer. Bitcoin hit another all-time high over $68,000 in November 2021, but by January 2022 had dropped back below $35,000. As of September 2022, bitcoin’s price struggles to stay above $20,000.
Bitcoin and Ethereum are the two largest cryptocurrencies by market cap and exchange volume, but they’re very different when you look past the popularity they share.
Not only do they have technical differences, they also offer two completely different value propositions for investors, which could be the deciding factor for you. Many investors see bitcoin as a store of value, like gold, that can be used as a guard against inflation. Ethereum, on the other hand, is a software platform that allows developers to build other crypto-oriented apps on it. To use Ethereum, developers have to buy and pay fees to the network in Ethereum’s native digital currency, ether.
There are similar risks associated with both bitcoin and Ethereum, and the potential growth of either is highly speculative. Both are good options if you are just starting a crypto investment journey, and you could just split the difference and invest in both, experts say.
Bitcoin was the first cryptocurrency, and it is known as digital gold. Bitcoin is the most valuable crypto on the market, but is still highly speculative and volatile.
The invention of the bitcoin currency (BTC) was simultaneous to the invention of bitcoin as a blockchain, and it was the first of its kind in history. It was created in 2009 by an anonymous person or group of people, known pseudonymously as Satoshi Nakamoto.
Bitcoin is valuable thanks to its limited supply steadily increasing demand by a greater number of investors. It has also been described by some as an inflation hedge.
Unlike investing in the stock market, with more predictable returns on investments like index funds, investing in bitcoin has been likened to investing in gold or other alternative assets such as art or horses. That’s because there’s a finite amount of bitcoin out there. While a company can issue more stock options, there will only ever be 21 million bitcoins. So even if the value of the dollar plummets, bitcoin, like gold, will retain a separate value in theory.
In the past few months, bitcoin’s price has hovered around $19,000 to $20,000, which places its market capitalization consistently above $360 billion.
Overall, bitcoin is considered a highly speculative and risky asset compared to conventional investments. While there is no guarantee you will get any of your money back, bitcoin has become the most valuable and commonly held among the thousands of cryptocurrencies that have since been created. As the first cryptocurrency, bitcoin has the longest record for investors to consider. The potential reward comes with higher risk, so make sure any investment in bitcoin is included in your broader portfolio’s riskier, more aggressive allocation.
Bitcoin’s rise in value and popularity has been steady, if not without its ups and downs. But there are no guarantees when it comes to investing in crypto. As quickly as bitcoin falls, it can just as rapidly climb again. Volatility is the norm for crypto, mostly due to it being an immature market. There are also new regulations and policies that are constantly reshaping the market and causing drastic swings — and hype on social media.
Yes, bitcoin is taxable. The IRS considers cryptocurrency holdings to be “property” for tax purposes, which means your virtual currency is taxed in the same way as any other assets you own, like stocks or gold.
The information contained herein is provided “as is” for educational and informational purposes only and is not intended to serve as investment advice or for trading purposes. Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities or any assets. The information has been authored from sources we believe to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness or completeness. Presenters may own the assets they discuss. You should not treat any opinion expressed by presenters as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of their opinions. The information and content are subject to change without notice. We are not under any obligation to update or correct any information provided herein. Past performance is not indicative of future results. We do not provide any individualized investment advice. Accordingly, this material does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendations appropriate for any person’s individualized circumstances. You must make an independent decision regarding any investment suggestions covered by the material. Before acting on any investment suggestions from the material, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment advisor. You should be aware of the real risk of loss in following any strategy or investment discussed.
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