With Bitcoin’s recent bull run, investing in cryptocurrencies has never seemed more enticing. That said, where does one get started?

The truth is, this isn’t an undertaking you should take lightly. Before even thinking about investing in crypto, you should learn about the blockchain. You should also get acquainted with things like mining, POW, PoS, utility and security tokens, and so on.

Once you understand the inner workings of crypto, you can start taking advantage of it. Here are four key factors that will help you get a good return on investment.

1. Total Supply

Each cryptocurrency has a total supply of coins that can enter the market. It also has a circulating supply, which represents the current amount of coins in the market.

These two figures are a key factor in evaluating crypto projects. The principle of supply and demand means that the supply of coins influences their price. As we’ve seen with Bitcoin, lower supply usually translates into higher demand.

This is why you should pay close attention to the crypto supply limit. If your currency of choice has a high total supply, it’s less likely to increase in value.

2. Business Proposition

Crypto projects are like any other startup or business. If they fill a need or solve a specific problem, they’re more likely to be successful.

If you’re planning on long-term investing, focus on the possible uses for cryptocurrencies. Identify currencies with real value and stay away from projects with shady founders.

Another thing to consider is the function of the cryptocurrency. If it’s a security token, anyone who owns a coin will own a piece of the company. This makes security tokens similar to stocks, which come with their own rules.

3. Community Activity

Strong community activity around a currency is always a good sign. The more involved a community is, the more valuable the coins tend to be.

One easy way to gauge the size of a community is to look at the coin’s Twitter page. Check out how many followers they have and how much activity is occurring on the account. Dedicated subreddits can also be a good indicator of activity.

You can also check GitHub to gauge developer activity. Any work done on GitHub is public, including the activity metrics of crypto projects.

4. Price History

All types of cryptocurrencies are volatile by nature. They’re influenced by hype, speculation, pump and dump (P&D) schemes, and more.

One thing that can help you make sense of all this is the coin’s price history. Cheap coins with lower market caps tend to be more susceptible to P&D schemes. By recognizing these tendencies, you can avoid unnecessary losses.

There are plenty of sites that provide the price history and conversion value of all major currencies. For example, you can read more here about USDT to CAD.

More on Investing in Cryptocurrencies

Investing in cryptocurrencies takes effort and time to do right. In any fast-growing industry such as crypto, there are plenty of dangers for new investors. That said, keeping note of the four factors we outlined above should help you make the right decisions.

Need some help in creating a sensible crypto investment strategy? Keep reading our Finance section!