Why You Shouldn't Care Which Cryptocurrencies Are the Most Popular

Does the popularity of a cryptocurrency matter when picking your investments?

Recent studies revealed that more than 50 million Americans are likely to purchase cryptocurrencies soon. Cryptocurrencies have become an increasingly popular investment as many Americans learn more about virtual coins and become interested in potentially making money off the rising value of different cryptos.

When choosing a crypto investment, it's tempting to focus on which coins have become popular recently and are making headlines. In reality, however, you generally shouldn't care about the popularity of a crypto investment at all, and should consider other factors when deciding which coins to buy rather than which ones are being heavily traded at the time.

Here are a few key reasons why you shouldn't care how popular a particular crypto investment is.

Popularity doesn't necessarily correlate with the value of the cryptocurrency

Cryptocurrencies can become popular for all sorts of reasons, including a celebrity endorsement or because they captured the attention of people on social media and became the subject of a meme.

Just because a particular currency is popular for the time being does not necessarily mean it has more intrinsic value than competing coins. Ultimately, the key factors that will affect whether a cryptocurrency goes up in value over time tend to be much more technical things, such as the technology underlying the coins, the circulation volume, and the real-world utility.

Most of the time these are not the considerations that drive a particular currency's popularity. Let's face it, circulation volume and real-world utility just aren't as fun or exciting to think about, as opposed to if the coins were endorsed by a cool influencer or have a cute back story.

Cryptocurrencies can become popular for the wrong reasons

Sometimes, celebrities will end up pushing a particular cryptocurrency because they were paid to do so. Or a currency will become popular because people are promoting it as part of a pump-and-dump scheme that's designed to make them rich by temporarily driving up the price and leaving later investors holding the bag.

There's less regulation of cryptocurrency than other assets. As a result, you could easily fall victim to a scam if you're making decisions about which cryptos to buy based on which ones happen to be getting the most attention at the time of your purchase.

Your own investing goals may be different than the goals of influencers

Those who are promoting particular cryptocurrencies may have more money to invest than you and may be better equipped to bounce back from losses. Or they may have a different mix of assets in their portfolio than you do, so a particular coin may make sense for them even if it doesn't for you. They may also be hoping to make a quick profit by day trading while you may be a more long-term investor looking for a currency that will hold its value over time.

Since you're in the best position to know your own investing goals and to make an informed determination of whether a cryptocurrency would be a good addition to your portfolio, you should ignore which coins are popular. Instead, as with any investment, focus on the fundamentals and make a fully informed decision that reduces your risk of losses over the long term.