3 principles for selecting a potential coin
To select a potential coin out of thousands of coins on CoinMarketCap’s list, instead of selecting randomly, we provide the following general rules:
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On the CoinDesk 20 list
CoinDesk 20 filters from the wider world of thousands of cryptocurrencies and digital assets to identify a core group of the top 20 coins. These assets make up about 99% of market volume on eight of the largest and most trusted exchanges.
To ensure this information is objective and completely authentic, CoinDesk relies on three studies from three of the most reputable organizations:
- “Filing with the United States Securities and Exchange Commission,” Bitwise Asset Management, March 2019.
- “Introducing ‘The Block 22’, an extension of 12 other exchanges besides ‘Bitwise 10′”, The Block, December 2019.
- “Determining the Integrity of Cryptocurrency Exchanges”, Digital Asset Research, November 2019.
Each study produces different results based on their respective criteria. Among them, learning The Block is the longest. This time, CoinDesk combined data from the three studies and came up with a list of 8 exchanges, including:
- bitfinexcomment
- coin base
- octopus
- Binary Stamp
- bitFlyer
- Twin sisters
- esBit
- Bittrex
- Poloniex
The reason we didn’t see Binance, Huobi, or OKEx… Even though these are major exchanges, they don’t meet the criteria for inclusion in the list above. This is because it is difficult to verify that there is no fake trading volume.
Coins must also meet the following criteria to be included in the CoinDesk 20 list:
- Must be traded on at least two Spot Trade (Spot) exchanges. Because arbitrage is one of the most important ways for the cryptocurrency market to maintain prices and control value. This is meant to limit spikes in the coin’s price on these exchanges.
- Today’s trading volume is aggregated from reliable news sites. These include CoinDesk; CoinMarketCap; CoinGecko…
There is a development time of more than one year
As previously mentioned, coins are usually shaped Cheating will have a fast growth rate but a relatively short life cycle. Therefore, to limit the inclusion of fraudulent projects in this list, you should filter out projects that are at least 1 year old.
Have a growth rate of more than 200% in 2020
To select potential cryptocurrencies for investment in 2021, we will focus on their growth rates over the past year. 2020 is arguably the year of altcoins. The majority of altcoins have sizable growth rates.
Therefore, in order to shorten the portfolio, we will screen coins with a growth rate of more than 200% in 2020. This growth rate data is compiled on CoinGecko. This means that if you want to continue to grow your list, you can always use the method above and narrow it down to find more opportunities.
So based on the 3 criteria above we will filter potential coins in 2021 which can be:
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