How to Find New Cryptocurrencies for Investment – Investopedia

Exchanges

Cryptocurrency exchanges are one of the most reliable sources for finding new investments. For example, Coinbase generally lists new cryptocurrencies on its website, but you must set up an account for better access. Binance also lists new crypto you can review and investigate further.

Data Aggregators

A data aggregator gathers information on specific topics. Cryptocurrency data aggregators help you find new crypto. For instance, CoinMarketCap collects and displays a list of new cryptocurrencies, their prices, market capacity, and trading volume. This type of service helps you get some information to determine what other investors think about the cryptocurrency and whether it has potential.

CoinGecko is another data aggregator that lists new coins with much of the same information that CoinMarketCap offers.

Social Media

Social media is known for its ability to transmit information fast. X (formerly Twitter), for example, is one of the quickest-moving and -responding platforms in the United States. You can easily find cryptocurrency developers and founders on X, tweeting about their cryptocurrency whenever there are changes or new coins.

Notifications for specific keywords on X are especially helpful. If you set up alerts for phrases like new crypto, crypto release, or crypto, you will receive notifications about any cryptocurrency-related tweet.

Telegram is another instant messaging platform that can deliver timely new crypto developments.

Websites

There are many websites that you can look over to find new cryptocurrencies. Some of the more reputable ones are Top ICO List and Smith & Crown.

Tools

You can use several tools to help you verify the validity of a cryptocurrency. PooCoin Charts lets you enter the token name or its address—if it’s on the Binance Smart Chain—and displays information about transactions, contracts, holders, prices, and more, enabling you to see whether anyone else is active. There are many other tools available for token investigating.

Token Sniffer lets you enter the cryptocurrency’s name or address and displays an audit of it. For instance, a scan of Ax-1 Orbit (address 0x0c…b805) displayed the following information on Aug. 13, 2022:

• Warning: The coin was flagged for being part of a scam, bug, or hack.
• Swap Analysis: The token is sellable and has a buy-and-sell fee of less than 10%
• Contract Analysis: Verified contract, no prior similar contracts, the source is not an owner, no special creator permissions
• Holder Analysis: Creator holds less than 5% of the supply, other holders have less than 5% of the supply
• Liquidity Analysis: Not enough liquidity, 95% of liquidity is burned/locked, creator holds less than 5% of liquidity
• Token Similarities: None

Token Sniffer lets you view the contract code and generate a bubble map showing you the creator’s address, the addresses of the top 100 holders, and the percentage they hold. You’ll also see any burn addresses, which is where developers send coins to take them permanently out of circulation.

DeFi Platforms

Decentralized finance (DeFi) platforms are ecosystems that combine blockchain, programming, and user interfaces that allow you to create decentralized applications (dApps). Some might even offer exchange and trading services, but most are designed to support decentralized finance applications like peer-to-peer lending and borrowing.

Many DeFi platforms have native tokens used within their networks to facilitate transactions. Examples of DeFi platforms are Maker, Uniswap, and Aave. In addition to being a blockchain, Ethereum also functions as a DeFi platform because it allows users to create anything they want on it, including dApps.

Non-Fungible Token (NFT) Marketplaces

NFTs are one-of-a-kind digital assets that have been tokenized. This is the process of linking hashed information from the asset and storing it on a blockchain. It establishes ownership without question because the token’s network validators must verify ownership through a consensus.

NFTs are also critical components of the metaverse, an emerging tech trend championed by enterprises that operate in the digital landscape. OpenSea and Rarible are two examples of popular NFT marketplaces. Here, you can find them ranging in price from hundreds to tens of thousands of dollars.

There are also specialized marketplaces that focus on a particular industry or sport. For example, the National Basketball Association (NBA) has an NFT marketplace called TopShot. Additionally, the National Football League (NFL) has partnered with Dapper Labs to produce exclusive digital video highlights of iconic moments in its history.

Initial Coin Offerings (ICOs)

Initial coin offerings (ICOs) eclipsed venture capital as the primary fundraising method for entrepreneurs in 2018. Startups and prominent companies alike jumped onto the ICO bandwagon. Then, the ICO bubble burst as scams proliferated in their ecosystem, and the Securities and Exchange Commission (SEC) began investigating and cracking down on them. The SEC now provides substantial guidance on when tokens and ICOs are considered the sale of a security.

You can still find ICOs, but they are highly regulated and not nearly as numerous.

Exchange-Traded Funds (ETFs)

You can also invest indirectly in cryptocurrencies through derivatives that trade on mainstream exchanges. The Chicago Mercantile Exchange (CME) crypto futures, including Bitcoin and ether futures, are popular with investors looking for indirect exposure to crypto. Bitcoin-linked exchange-traded funds (ETFs), based on CME’s Bitcoin futures, debuted in crypto markets in 2021.

In January 2024, the long-awaited and embattled Bitcoin Spot ETFs were approved by the SEC. These ETFs offer exposure to bitcoin but are much cheaper because you can purchase shares of a fund that holds bitcoin rather than buy bitcoin directly.

Researching New Crypto Coins

Beneath their technical jargon, cryptocurrencies are products that serve a purpose, whether it be only a payment method (bitcoin) or as a utility token used to perform actions on a blockchain (ether).

Here are some factors to look into and tools you can use to help identify a coin that is not a so-called rug pull, which is a coin whose developers will accept payments for it and then pull it off whatever platform you purchased it on while also keeping the funds you paid.

Use Cases 

Ethereum’s ether (ETH) token is used as a payment system on its blockchain. This makes ETH a perfect example of a use case that might incentivize someone to buy ETH. Ethereum is designed for scalability and future development, making it an ideal ecosystem to build DeFi applications on.

The uses for Ethereum, the global virtual machine that powers much of DeFi—and is rumored to be powering Web 3—continue to grow. New utility tokens designed to work on the Ethereum Virtual Machine (EVM) emerge frequently.

Bitcoin, on the other hand, was designed purely as a payment method. But when investors noticed its price was climbing, the token developed another purpose. The global pandemic shut down much of the world’s economy for a brief time, and stock markets worldwide tumbled. Bitcoin, however, became a safe haven for investors looking to preserve value and a speculative investment.

The more use cases that a new coin and the blockchain that it supports have, the more likely it is that the cryptocurrency will last long enough to experience growth. However, this won’t always be the case.

Liquidity

A cryptocurrency needs liquidity—meaning that it should have enough trading volume to sell it quickly if you need to. If you find a cryptocurrency with no volume, you should consider waiting to see whether it will develop any. If other investors aren’t trading a new crypto coin in large amounts, it might indicate that it isn’t yet worth buying or is a scam.

Value

You should identify the value a coin has or might have. It’s likely that if it has value to you, others will value it. This type of value isn’t only monetary; it is more intangible, such as an NFT that you identify with on a personal level.

Some songwriters and musicians are creating NFTs from their music. Purchasing a song NFT directly supports the artists and gives you ownership of the token and whatever rights the artist granted when the token was minted. The sports tokens mentioned previously may be the equivalent of trading cards or videos of the future.

Some additional considerations are:

• Prospects: If you’re able to identify a cryptocurrency with an edge over others—such as providing a solution to a widespread problem—it might be a good investment because it could have longevity.
• Supply and demand: Many cryptocurrencies have a predetermined maximum supply. When that maximum is reached, typically through mining efforts, no new tokens will be produced. Demand may increase or decrease, depending on market sentiments and use cases.
• Price and volume: Up-to-date information about cryptocurrency trading is easily available online. Digital currencies with increasing prices and trading volume are likely to be those that have momentum. Of course, there is no guarantee that this momentum will be maintained, but it is nonetheless a useful way of seeing which digital currencies have the most investor interest for the time being.

The Bottom Line

The universe of investable cryptocurrencies and crypto-related products and services is still small and requires careful evaluation. If you’re interested in investing in digital assets and new crypto, you should first talk with a finance professional to help you figure out if the investments make sense for your goals and financial circumstances.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes online. Read our warranty and liability disclaimer for more info. As of the date this article was written, the author does not own cryptocurrency.