Which cryptocurrency to buy? Five criteria that matter before the coin

Anyone who wants to buy a cryptocurrency usually looks for a name first. That is the most expensive order of operations this asset class offers. On October 15, 2026, CoinGecko lists exactly 22,260 active cryptocurrencies, traded on 1,504 venues and worth 2.76 trillion dollars, or 2.47 trillion euros, in total. A name tells you nothing about any of them. Five criteria do, and you can work through them in a quarter of an hour, before the first euro reaches an exchange account.

The five criteria are market capitalisation, supply, use, custody and tax. None of them is a price forecast, and that is where their value lies: a forecast ages overnight, while these five questions work in October 2026 exactly as they will in two years. What changes are the answers.

22,260 cryptocurrencies and 1,504 venues: why the question about the coin comes too early

The market is heavily concentrated. On October 15, 2026, Bitcoin accounts for around 59.3 percent of total market capitalisation and Ethereum for a further 10.7 percent. The remaining 22,258 cryptocurrencies share roughly 30 percent between them. That distribution is the first useful piece of information you get without having picked a single coin: two names set seven tenths of the market, and the rest spreads across a very long tail of very small positions.

No verdict on individual projects follows from this. What follows is an order of examination. Start with a second-tier coin and you have to answer all five criteria at once with no yardstick for any of them. Start with the largest and you build the yardstick the smaller ones will later be measured against.

What separates a criterion from an argument

A criterion is a question asked the same way of every cryptocurrency, with a verifiable answer. “How many tokens are in circulation?” is a criterion. “The project has a strong community” is an argument, and it has no place on this list, because nobody can measure it. Each of the five questions below has a number, a name or a statutory provision as its answer.

Criterion 1, market capitalisation: the size of the market, not the height of the price

Market capitalisation is the price multiplied by the circulating supply, in other words the total value of all freely tradable units. That figure answers the question of how much money sits in a cryptocurrency, and it is the only value that allows two coins to be compared at all.

The price on its own is no use for that. On October 15, 2026, Bitcoin stands at 72,840 euros, giving it a market capitalisation of 1.464 trillion euros. Dogecoin stands at 0.07292 euros and reaches 11.4 billion euros. The gap in price is a factor of a million; the gap in market capitalisation is a factor of only 128. A low price therefore does not mean a coin is cheap, only that there are many units of it.

In practice, proceed like this: look up where the coin sits in the ranking and note its market capitalisation in euros. Ranks 1 to 10 mean you will find buyers and sellers at every larger venue. From rank 100 it thins out, and from rank 500 a single venue often sets the price. Two values are enough, then: rank and market capitalisation in euros. Both appear on the same line as the price at any price service.

Criterion 2, supply: circulating supply, maximum supply and the tokens still to come

Circulating supply is the number of units in the market today. Maximum supply is the ceiling the protocol permits at all. Where the two figures lie far apart, more supply is still queued up, and every new token spreads the same total value across more holders.

With Bitcoin, 20,098,271 of a maximum 21 million units have been issued, or 95.7 percent. Around 902,000 Bitcoin are still outstanding, 4.5 percent of today's circulating supply, released over the coming decades. With XRP the arithmetic looks different: 63.13 billion units are in circulation and the maximum supply is 100 billion. The difference of 36.87 billion tokens equals 58 percent of today's circulating supply. You can do this calculation yourself for any coin; it takes just two numbers.

The third variant is the open one: Dogecoin has 156.33 billion units in circulation and no maximum supply at all, with new ones arriving continuously. That is neither a flaw nor a merit; it is a property you need to know before you buy. Added supply does not inevitably weigh on the price, but it shifts the relationship between today's valuation and the future quantity, and you can work that relationship out before you buy.

Fully diluted valuation in one sentence

Fully diluted valuation, or FDV, is the price multiplied by the maximum supply rather than the circulating supply. The figure shows what a cryptocurrency would cost if every token already existed. Where FDV diverges sharply from market capitalisation, you know how much dilution is still on the calendar.

Criterion 3, use: what the network actually needs its own token for

This is where it gets uncomfortable, because there is no ranking here. The question is: what happens in the network if nobody holds the token? With Ethereum, every transaction pays its fee in ether, and anyone helping to secure the network posts ether as collateral. Without the token the network does not run. With Bitcoin the token itself is the product, a means of payment and store of value with a limited quantity.

For many smaller projects the honest answer is this: the token grants a vote in a governance ballot and nothing else. That is permissible; it is simply a weaker justification for a price. You will find the answer in the project's documentation, usually under “tokenomics”, where it takes two or three paragraphs. If it is not there, that is an answer in itself.

A second check sits alongside it, and it costs little time: is the token controlled by a company or issued by an open network? With a company, its value hangs on that company's decisions; with an open network, on rules written into the program code. Both models exist, but they carry different risks, and only one of them is something you can read for yourself.

Criterion 4, custody: whoever holds the private keys holds the coins

A private key is the string of characters that moves a balance on a blockchain. Whoever has it controls the coins, regardless of which app displays a balance. The fourth question follows from that: do the keys sit with the venue or with you?

Both routes are legitimate. At a venue the purchase is done in two minutes and you have no credentials to secure, but you carry the provider's risk. With self-custody via a hardware wallet the risk is yours, and losing the recovery words is final. For picking a coin, a third point decides, and many people overlook it: not every cryptocurrency is supported by every wallet. Bitcoin and ether run everywhere; a third-tier token often runs only in the project's own app.

So check before you buy, not afterwards, whether your coin appears on the list of supported networks for the device you intend to use. That list sits with the manufacturer, it is public, and it changes with every firmware release.

What happens when a venue drops a coin

Venues regularly remove tokens from trading, usually with a few weeks' notice. If the token sits there and you miss the deadline, the balance is converted into a stablecoin in the best case; in the worse case you have to supply a withdrawal address, for which you first need a suitable wallet. Settle the custody question before buying and there is nothing to do at this point.

Criterion 5, tax: the one-year holding period under Section 23 of the Income Tax Act and the 1,000-euro threshold

In Germany this criterion decides the return more often than the choice of coin does, and it is the one checked least. Gains from the sale of crypto assets count as a private disposal transaction. The statutory wording is short: transactions are taxable “in the case of other assets where the period between acquisition and disposal is not more than one year”, in the words of Section 23(1) sentence 1 no. 2 of the German Income Tax Act. Once a year has passed from the day of purchase, the gain goes untaxed.

A threshold applies to short-term sales on top of that: gains stay tax free where the total gain from all private disposal transactions in a calendar year stays below 1,000 euros. That is an exemption threshold, not an allowance. The difference is expensive: at a gain of 999 euros you pay nothing, at 1,000 euros the full amount is taxable, not merely the euro above the line.

What is being negotiated about the holding period right now

The period is politically contested. On October 8, 2026 the Bundestag rejected two motions to abolish it, the Greens' motion by a recorded vote of 445 to 132, as we reported on October 9 on the vote in the Bundestag. At the same time the Federal Ministry of Finance is working on a draft that would assign crypto gains to income from capital assets and delete the one-year period for acquisitions from 2027. That draft has not been adopted, and for coins bought today the statutory wording above applies unchanged.

For choosing a coin that means two things. First: anyone intending to hold for more than a year anyway has no need of a coin with large daily swings. Second: anyone swapping more often creates a new disposal transaction with every swap, including a swap from one coin into another. The more positions you run, the more purchase dates you have to be able to prove. How to keep those records clean is shown in our comparison of crypto tax software and portfolio trackers.

Before the first purchase: MiCAR authorisation and who supervises your venue

The five criteria apply to the coin. One question concerns the route to it and is just as verifiable: is the provider allowed to run this business in the EU at all? The basis is Regulation (EU) 2023/1114 on markets in crypto-assets, or MiCAR. Anyone providing crypto-asset services to customers in the EU needs authorisation from a national supervisor, in Germany from BaFin.

The number of providers that have cleared this hurdle is manageable. On October 9, 2026 the EU finance ministers agreed to place only the largest service providers under the direct supervision of ESMA; for the large majority of the roughly 360 providers authorised in the EU, the national authority remains responsible, as we reported on October 13. The figure of 360 is the order of magnitude against which you can check any provider name: if it is not in the supervisor's register, it does not hold the authorisation.

In practice this needs no specialist knowledge. Take the company name from the platform's legal notice, not the brand name of the app, and search for it in BaFin's company database and in the EU register of crypto-asset service providers. If you find it in neither, the question of the right coin is settled before it is asked.

Bitcoin, Ethereum, XRP and Dogecoin: the five criteria across four examples

Here is what the grid looks like filled in, with the values as of October 15, 2026. The examples are not a selection and not a recommendation; they only show how differently the same five questions turn out.

Bitcoin: rank 1, market capitalisation of 1.464 trillion euros. Supply capped at 21 million, of which 95.7 percent issued. Use: the token itself is the product. Custody: supported by every hardware wallet. Tax: free of tax after a holding period of one year.

Ethereum: rank 2, 263.9 billion euros. Supply without a fixed ceiling, 122.13 million units in circulation. Use: fees and collateral in the largest network for applications. Custody: supported everywhere. Tax: take care when posting collateral, because ongoing income can arise in the process.

XRP: rank 5, 74.9 billion euros. Supply capped at 100 billion, 63.13 billion in circulation, so a further 58 percent of the circulating supply still to come. Use: payments within the associated network. Custody: broadly supported. Tax: as for any crypto asset.

Dogecoin: rank 12, 11.4 billion euros. Supply unlimited, 156.33 billion units in circulation. Use: a means of payment with no function in the network beyond that. Custody: broadly supported. Tax: as above.

Our assessment: of the five criteria, supply contributes most to the decision and is checked least. The evidence is above: with XRP it is 36.87 billion tokens that can still arrive within the protocol ceiling, and with Dogecoin the ceiling is open. Against that, added supply does not automatically weigh on the price as long as demand grows with it; with Bitcoin the dilution is stretched over decades and has practically no effect. No buy recommendation follows from this for any of the four names, and a total loss is possible with every crypto asset.

Three mistakes in choosing a coin that beginners pay dearly for

The price as a price tag. “The coin only costs a cent, so there is more room to run” is the most common fallacy. The room to run sits in the market capitalisation, not in the number of digits after the decimal point.

The list of biggest daily gainers as a shortlist. Buy there and you are buying the move that has already happened, and with small market capitalisations often into a market where selling is harder than buying.

Tax at the end of the year. Wait until December to see which purchase dates are documented and you have long since given up control over the one-year period. The period starts on the day of acquisition, and with several partial purchases each tranche has its own date.

How much money into which coin? Allocation comes before selection

Once the five criteria are answered, the question of position size remains. Strictly speaking that question belongs before the choice of coin, because how the money is split affects the outcome more than the choice between two similar cryptocurrencies. One figure we measured ourselves helps here: over twelve months the four largest cryptocurrencies moved with a correlation of 0.82 to 0.90, as set out in our analysis of weighting in a crypto portfolio. Four different names therefore do not yet make four different risks.

A sober order of operations follows: first the amount you could lose in full without it hurting; then the number of positions you can actually manage for tax and for custody; and only then the names. In that order, choosing the coin is the last and smallest step.

Buying a cryptocurrency: the five criteria first, then the coin

1. Check the venue and look up its authorisation. Search for the company name from the legal notice in the supervisor's register and compare the costs alongside it, before you open an account. The terms offered by authorised providers are set out in our comparison of the best crypto exchanges.
2. Settle custody before you buy. Decide whether the coins stay at the venue or move to a device of your own, and check support for the network you want. Which devices carry which networks is shown by the hardware wallet comparison.
3. Record the purchase date and price from the start. Every tranche needs a date, a quantity and a price, otherwise the one-year period cannot be proven later. Which programs log this automatically is set out in the comparison of crypto tax software.

(As of October 15, 2026. This article is not investment advice. Prices and fee structures change; check the terms with the provider before you buy.)