What Is The Most Profitable Crypto To Trade? Ultimate Guide

12 MIN READ
What is the most profitable crypto to trade?

If you have become increasingly passionate about the world of blockchain recently, and you are looking to find out what the best cryptocurrencies to trade are and what strategies you can optimize to maximize your profits, this article from PlasBit is for you. What is the most profitable crypto to trade in 2024? This is a difficult question to answer because it depends on your trading strategy and because no one can predict exactly how cryptocurrencies will perform. If you are looking for less risky long-term growth, Bitcoin (BTC) is probably the most profitable cryptocurrency for you to invest in. Instead, if you plan to trade in the short term, then Internet Computer (ICP) or Solana (SOL) may be more suitable for you to seek more profitable trading. Being profitable in trading and investing is a difficult mission, requiring study, commitment, mistakes, difficulty, and perseverance. It's not for everyone, but if you plan to start investing and trading cryptocurrencies, you should start by getting informed, and this article is for you. We will explore the most promising cryptocurrencies and provide useful tips and strategies to minimize risk and maximize profits consistently.

Selecting The Most Profitable Crypto To Trade

To choose the most profitable cryptocurrencies for trading or investing, the first step is to understand the key factors to consider when evaluating a cryptocurrency's potential. This will give you a holistic view of a specific cryptocurrency, but comparing them to other potential competitors is another factor that should not be underestimated. In fact, very often, most investors and traders focus on studying a few specific cryptocurrencies, finding their actual growth potential, but forget to compare them with other established, emerging, or subsequently created potential competitors. Now, let's look at the various factors to consider when assessing the potential of a specific cryptocurrency.

Technology Behind The Cryptocurrency

The technology and innovative potential of cryptocurrency are the first factors to consider when understanding future prospects. Indeed, the blockchains behind cryptocurrency can be of different types and have various innovative potentials in different sectors. Each blockchain has different goals and use cases, from DeFi, through IoT-Blockchain-Oracles integration, to asset tokenization. It goes without saying that to understand the potential of a cryptocurrency, the first element is to understand how its technical and technological mechanics actually work. For example, in 2024, it might be risky to invest in a layer 1 blockchain based on proof-of-work that is not Bitcoin, as due to high energy consumption and competitiveness in terms of scalability, speed, and energy savings, proof-of-stake is gradually replacing this technology (except Bitcoin, which remains the first and arguably most secure and decentralized cryptocurrency to date, as well as the most established).

Market Capitalization

This is another very important factor to consider when choosing the most promising cryptocurrency to trade. This is because investing in a highly capitalized cryptocurrency allows you to mitigate the risks of volatility while reducing the potential for profits. Conversely, investing in a low or very low capitalization cryptocurrency carries high risks of losing much or all of your capital, but at the same time, can lead to much higher profits. So, you have to consider your goals, especially your risk tolerance and time perspective. If you trade in the short term and are very risk averse, a low-capitalization cryptocurrency might be for you because it is more volatile and more potentially profitable. Conversely, if you are a long-term investor and are not looking for a high profit in the short term but are aiming for compound interest, then high-capitalization cryptocurrencies might be more for you.

Trading Volume

Trading volume is another important factor to be analyzed. It reports the amount of assets traded in a specific time frame, including both buy and sell orders executed. This is very important to monitor because it affects certain psychological mechanics and chart patterns that determine some common investor behavior and because it reports how liquid a market is and, therefore, how easy it is to buy or sell assets in a given period. We will analyze this factor in the next section.

Asset Liquidity

It is very important to consider this factor, especially if investing in a cryptocurrency with low capitalization. It is because liquidity shows how easy it is to buy or sell a cryptocurrency at a given price. In fact, if a market is not liquid, it will not be executed immediately if I place a sell order at a certain price, as there are not enough buy orders at that price. This means that I will have to wait until there are buy orders to execute my sell order at that price, or I will have to accept to trade at a price more to my disadvantage to execute the order immediately, losing a varying percentage of my money due to slippage. In the most severe cases, such as in pump-and-dump or rug-pulls, there might not even be any buy orders, only sell orders. It means that at that time (and probably also in the future), I will no longer be able to convert that cryptocurrency because no one is willing to buy it. This underlines the importance of careful evaluation before investing in any asset.

Token Economy

Assessing the token economy of a crypto project is essential to understand what one is investing in. In fact, factors such as supply, token issuance, fund management, rewards, and others are indispensable to best assess a cryptocurrency's actual growth potential. One of the main innovations of cryptocurrencies lies precisely in their predetermined supply: unlike most fiat currencies, which since the abandonment of the Gold Standard no longer had a supply pegged to something, giving rise to increasing inflation, cryptocurrencies have an a priori predetermined supply that can be understood and analyzed. For example, the relationship between price and supply is a key factor to consider. This has to be done with critical analysis, having an overview, also considering competitors, and being aware of one's own cognitive biases.

Team Successes and Potentialities

The people behind cryptocurrencies are perhaps the most important factor determining their value. Indeed, a technology without a development team to maintain, improve, and implement it is useless. Having a competent, recognized team with a proven track record of success is a competitive advantage that makes cryptocurrency very promising. Conversely, in fact, if there are one or more people behind a cryptocurrency who have been involved in previous scams or incidents of mismanagement, then there is a good chance that this new project or cryptocurrency will also be a failed project. So, always evaluate the people behind the projects and cryptocurrencies you invest in. Would you invest your money in these people? This also is one of the reasons why Bitcoin is the most established cryptocurrency: The founder is anonymous, and the cryptocurrency works without a team, the only one.

Community Support and Engagement

Finally, another crucial factor is the analysis of community support. The key to success in Web3 lies precisely in decentralization and communities. A project that does Web2 marketing in cryptocurrencies can only go so far. In Web1, when there were only static informational sites, such as Wikipedia, there was no interaction between the site and the user. In Web2, with the advent of platforms like Facebook or Twitter, users can interact with the site and each other, but they own neither their data nor their content. In Web3, users are part of the site and cryptocurrency projects. Community support is essential for several factors, especially feedback, which is useful for improving the project and the platform, and word-of-mouth, an indispensable element for scaling marketing cheaply.

7 of The Most Profitable Cryptocurrencies

Now that you understand what factors you need to analyze to assess the potential of individual cryptocurrencies, you can begin to consider which cryptocurrency to invest in for maximum profit.

But consider evaluating carefully based also on your risk tolerance, profit goals, strategy, and time horizons. Invest only what you can afford to lose.

1. Bitcoin (BTC)

Bitcoin is the first and most well-known cryptocurrency, introduced in 2009 by the anonymous Satoshi Nakamoto. The cryptocurrency's growth potential is driven by its increasing acceptance as a digital store of value, proved by the recent Bitcoin ETFs approval by the SEC and its growing adoption among institutional investors and companies. Additionally, its fixed maximum supply of 21 million BTC confers scarcity, which could ultimately lead to price appreciation over time with the emission defined in the halvings mechanics.

- Current Market Cap: Over $1 trillion (Position 1)

- All-Time High (ATH) Price: Over $65,000

- Institutional Adoption: Companies like MicroStrategy, Tesla, and Square have invested in Bitcoin as a treasury reserve asset.

2. Solana (SOL)

Solana is a blockchain platform that focuses on scalability and transaction speed. Its innovative architecture and proof of history consensus could enable it to effectively compete with Ethereum and other platforms for decentralized application (dApp) development. Its growth potential has already been proved in 2023; in fact, SOL gave an incredible 965% return.

- Current Market Cap: $50 billion (Position 5)

- Transactions Per Second (TPS): Can handle over 65,000 TPS

- Developer Activity: Solana has significantly increased developer activity and projects built on its platform.

3. Ethereum (ETH)

Ethereum pioneered blockchain smart contracts, enabling the creation of decentralized applications (dApps). Its growth potential is tied to its widespread adoption in the dApp, decentralized finance (DeFi), and NFT (non-fungible token) markets. However, Ethereum faced significant challenges related to scalability and high transaction fees, but implementing Ethereum 2.0 and further blockchain improvement mitigates this problem while increasing institutional and widespread adoption.

- Current Market Cap: Over $300 billion (Position 2)

- Gas Fees: Gas fees on the Ethereum network have concerned users and developers.

- Upcoming Upgrades: Ethereum 2.0 aimed to address scalability issues with the transition to a proof of stake consensus mechanism, but the blockchain still needs more improvements to make it the ultimate best choice for smart contracts.

4. Internet Computer (ICP)

Internet Computer aims to revolutionize how decentralized web applications are executed, allowing them to run directly on the blockchain. Its growth potential lies in its ambition to replace centralized cloud infrastructure with a decentralized platform. However, it must contend with competition from other decentralized platforms and the challenge of gaining adoption and trust in the industry.

- Current Market Cap: Over $6 billion (Position 16)

- Decentralized Apps (dApps): Internet Computer aims to attract developers and projects looking for a decentralized execution environment for their applications.

5. Tron (TRX)

Tron is a blockchain platform that focuses on digital content sharing and online entertainment. Its growth potential is supported by partnerships with entertainment industry companies and its increasing adoption in emerging markets. However, it must demonstrate its ability to effectively compete with other more established blockchain platforms in the decentralized application space.

- Current Market Cap: Over $12 billion (Position 10)

- Partnerships: Tron has secured partnerships with companies like BitTorrent and Samsung.

- Entertainment Industry Focus: Tron aims to disrupt the traditional entertainment industry through blockchain technology.

6. Cosmos (ATOM)

Cosmos is a blockchain network designed to enable interoperability between different blockchains. Its growth potential lies in its ability to solve the problem of blockchain silos, allowing them to communicate and transfer value between each other. This could make it an attractive choice for projects requiring interaction between different blockchains.

- Current Market Cap: Over $4 billion (Position 23)

- Interoperability: Cosmos aims to become the "Internet of Blockchains," facilitating seamless communication and transactions between different blockchain networks.

7. Pepe (PEPE)

Pepe is a meme-based cryptocurrency that focuses on no utilities. The cryptocurrency runs on the Ethereum blockchain, but it basically doesn't have any benefits or utilities. So, why is it on this list? Because this type of cryptocurrency, the meme-coin, is probably the best choice for maximum-high-risk investors. In fact, if you invested 1.000$ in April 2023 in PEPE, in just a few weeks, you could have made a profit of more than 35,000$, more than 35,000%! This crypto has created several new crypto millionaires, but this kind of cryptocurrency is high-volatility and not so much liquid, so the risk of losing all of your assets is elevated.

- Current Market Cap: $500 million (Position 121)

In conclusion, each analyzed cryptocurrency has its own unique growth potential, determined by factors such as adoption, underlying technology, governance, and competition in the industry. Investors should conduct thorough research and carefully evaluate these factors before making investment decisions. Do your own research (DYOR) because these are no financial advice, and you are responsible for your choices.

What is the most profitable crypto to trade?

Various Trading Strategies for Different Approaches

Now that you may have a clearer picture of the various factors to consider and some promising cryptocurrencies (which you will need to analyze more independently on other information guides anyway), you can evaluate which trading strategy is best for you. As you learn more about various investment and trading methods, the PlasBit Team invites you to think about your trading goals, the time perspective of your investments, your available time to devote to them, the risks you are willing to take, and the money you can invest. In this way, you can choose a strategy to pursue that best suits your needs.

  • Scalping Trading: In this trading method, you can capitalize on small movements by making numerous trades. This allows you to earn a small percentage of profit in each trade, but you need many trades to have a consistent gain in the day. In scalping trading, calculating your success rate and ROI for a week are essential metrics for testing whether your strategy is working or not for you.
  • Day Trading: In this other method, traders generally sell and buy cryptocurrencies on the same day without holding open positions overnight. This allows both to avoid unpleasant surprises while sleeping or doing other things and to consistently monitor one's daily percentage ROI. In fact, even earning "only" 0.5 percent each day can lead to great long-term results due to compound interest. Consider also the platform's fees, so choose the best crypto exchange for day trading that can satisfy your needs.
  • Range Trading: In this method, we rely on technical analysis to identify price ranges in which the cryptocurrency might bounce for a while. So, you open long buy positions when you are at the low end of the range and sell at the high end. A lot of technical expertise is required to highlight resistances, supports, and chart patterns.
  • Swing Trading: In this method, you can capitalize on medium-term trends by holding your position open until it reaches a certain support previously identified primarily through technical analysis. This strategy also requires excellent trading and analytical knowledge, but it is less stressful than day trading. Unfortunately, black swans are not preventable, so remember to set appropriate stop-loss.
  • Position Trading: In this case, more than a trader you can consider yourself an investor. In fact, this strategy involves using fundamental analysis and macroeconomic trends to open long-term positions and hold them for several years. It is definitely a less stressful, less risky strategy, but at the same time, very promising. But if you want consistent profits, you can try trading with one of the above strategies.

What is The Most Profitable Crypto To Trade? Risks and Final Considerations

So, do you want to know what is the most profitable crypto to trade? Nobody can answer this question in a univocal way for all. Every person has different goals, time and funds available, risk aversion, and so on, so we cannot say what is the most profitable crypto for you. Based on the data, we can say that SOL was the biggest gainer in 2023, with an incredible 965%. Can it repeat itself in 2024? Maybe, but do not forget that the only crypto globally recognized as a store of value is still Bitcoin. In fact, except for the Bitcoin blockchain, all the others are focused on utilities and the tokens mostly reflect the adoption of their blockchain. In the long term, most of the top 100 cryptocurrencies will probably be subclassed by new ones with better technology, as has already happened in the past. So, let's recap the most crucial risks to keep in mind before investing:

  • Volatility: While it offers significant profit opportunities for the best and most experienced traders, it can lead to considerable losses for new investors. In fact, it is very difficult for medium- and long-term investors to mentally reign in and maintain a position when a cryptocurrency undergoes a rapid substantial negative change. For short-term traders, on the other hand, it is very complicated to place the stop-loss correctly and avoid closing at a loss or, worse, being liquidated and losing the entire position if you are trading with leverage.
  • Still Not Fully Regulated Asset Class: As much as various financial regulators are trying to regulate cryptocurrencies, restricting or controlling blockchain activity is complex, as is setting security standards for exchanges and other various regulations needed. As much as trading an unregulated asset can bring profits, it can also lead to big losses. Also, remember to use secure exchanges with proven proof of reserves, such as our platform.
  • Many Types of Scams: In Web3 and cryptocurrency, scammers are a constant threat. New modes of scams are constantly invented, such as address poisoning attacks or crypto romance scams. Also, watch out for various Ponzi or pump-and-dump schemes. Be wary of those who explicitly promise safe returns in the short or medium term: Remember, if something is too good to be true, it's probably because it is.
  • Using Leverage in Trading: As much as leverage can multiply your profit potential, making it very attractive, it can also cause substantial losses, especially for less experienced users. In fact, for example, with x100 leverage, a 1% change is enough to lose all one's funds. If you really want to use them, make moderate use of leverage and place stop-losses carefully.

In conclusion, what is the most profitable crypto to trade? In this article, PlasBit has provided you with all the information you need to investigate for yourself and make informed and responsible decisions. Be wary of those who give you financial advice, and remember that the key to profitable trading is continuous self-improvement.