Crypto is an ever-growing industry with new projects being introduced that captured VCs' interest in pooling their money to invest in these early projects. Find out who they are! 

Venture capital firms in the crypto space seek to invest in high-potential blockchain projects and companies. They typically invest in early-stage startups and provide capital, advice and resources to help these companies grow. Venture capital firms play a vital role in the blockchain ecosystem, providing valuable resources to support projects’ growing and scaling quickly. 

In addition, crypto VCs provide training and guidance to startups as they navigate the often complex world of blockchain technology. By helping entrepreneurs understand the nuances of blockchain technology, they can ensure that their investments are well-positioned for success. The preferred sectors and stages of investment vary, depending on the firm. Still, these firms prefer to invest in startups building blockchain-based products, services and platforms that solve real-world problems. The most popular in the crypto scene include:

Need more help understanding how it works? Let's dive right into the mechanics. 

Crypto venture business funding is a form of financing that’s used to invest in early-stage blockchain projects. This type of investment typically involves the purchase of equity or tokens in the project, which gives investors a stake in the future success of the business.

The process begins with the project founders seeking venture capital firms specializing in blockchain projects. These companies usually have a portfolio of investments and will evaluate the potential success of each project before deciding whether or not to invest.

The venture capital firm will then negotiate terms with startup companies, such as how much money they will invest, what kind of equity or tokens they will receive, and how long their investment will last.

Once both parties reach an agreement, funds are then transferred from the venture capital firm to the company's bank account. Depending on the fund type, the startup can use the investment capital for various purposes, such as hiring new team members, developing new products or services, and marketing campaigns. These include different rounds of series funding including Pre-seed funding, Seed funding, Series A, B, C or D funding to solidify their operations.

The venture capital firm also provides guidance and advice to help ensure that the company is successful. This includes assisting teams in developing their business plan and connecting them with other industry experts who can provide additional resources and advice.

Finally, once a certain period has elapsed (usually 5–7 years), investors may have an opportunity to cash out their investments by either selling off their equity or tokens on an exchange platform (if applicable), or negotiating with the project founders directly for an exit strategy.

Top Criteria of a Good Crypto Venture Capital Firm

You can determine whether a crypto venture capital fund is effective or not. Here’s a list of criteria to consider:

: Assets under management (AUM) measures the total value of all the investments managed by a venture capital firm. It includes all the assets that have been invested in companies, funds and any cash or liquid investments held by the firm. AUM is used to measure the size and performance of a venture capital firm, and can indicate its success in attracting investors and making successful investments.

2. Number of successful investments (track record)

: The number of successful investments (track record) is vital for determining the success of a venture capital firm because it serves as an indicator of its ability to identify, invest in, and help grow promising businesses. It provides a measure of the firm's performance over time. and allows potential investors to gauge the quality and success of the investments made. A track record of successful investments can also provide valuable insights into a firm's investment strategy, risk management approach and overall value-add to its portfolio companies.

: Reputation in the industry is crucial for determining the success of a venture capital firm. It can be a major factor in attracting potential investors. A good reputation helps build trust, which is essential for successful fundraising and investment. Additionally, a solid reputation can help to create relationships with the most promising entrepreneurs and startups. This can lead to more successful investments and higher returns for the firm. Finally, a good reputation can also increase the firm's visibility, leading to more opportunities and better deals.

: Networks and resources are essential for determining the success of a venture capital firm because they allow the firm to identify potential investments, conduct due diligence and provide ongoing support to its portfolio companies. Having access to resources such as industry contacts, financial advisors, legal counsel, and other specialized professionals can help a venture capital firm make informed decisions, maximize investment returns and protect its interests. Additionally, having an extensive network of investors can provide a venture capital firm with additional funding sources for new investments and support existing portfolio companies.

: The quality of a venture capital firm's team and staff determine the firm's success, since it plays a significant role in the decision-making process. The team and staff must be knowledgeable about the industry, have a good understanding of the market, and be able to identify and assess potential investments accurately. Additionally, they must have strong relationships with entrepreneurs and other investors to make well-informed decisions that benefit the firm. A strong team and staff can help ensure that a venture capital firm makes sound investments that generate high returns for its investors.

: The quality of portfolio clients directly affects a crypto VC's return on investment. Venture capital firms invest in companies expecting to generate a significant return. If the portfolio companies are unsuccessful, the venture capital firm won’t be able to generate a profit, and will ultimately fail. Additionally, having high-quality projects and clients allows venture capital firms to attract more investments from other investors, which helps them grow and expand their operations.

How Do Crypto VC Firms Support Blockchain Startups?

Crypto VC firms typically provide capital to blockchain startups in exchange for a stake in the new business. In addition to providing capital, crypto VC firms offer support and guidance to these startups, assisting with developing their product/service, identifying potential customers and partners, and navigating the legal and regulatory environment. Crypto VCs also provide access to their network of industry contacts and resources, which can help the startup succeed.

Number of successful investments (track record)

: Coinbase Ventures isn’t directly backed by Coinbase, but is a separate entity. It has made investments in several successful projects and has also been involved in industry events and initiatives such as the ChainXChange conference, Decentralized Web Summit and Token Summit.

: Coinbase Ventures looks to collaborate with partners who share their mission of creating an open financial system for the world. It utilizes Bitcoin, Ethereum, Ripple and Litecoin.

: Avalon, Diagonal Finance, Magic Eden, Sardine and YOZ Labs.

: $4.1 billion in blockchain-related assets

: Pantera Capital is widely known as one of the top venture capital firms in the world. It has invested in some of the most successful crypto companies, including Circle, Coinbase and Ripple. It has also been credited for helping to launch the ICO boom in 2017. The firm is well-respected for its expertise and experience in the blockchain and cryptocurrency industry, and is seen as a reliable source of investment advice.

: Pantera Capital also utilizes its network of over 1,000 investors and strategic partners to provide access to resources such as capital, talent and market intelligence. Additionally, Pantera Capital has an extensive research team that offers insights into the blockchain ecosystem and helps identify opportunities for investment.

: BitDAO, Korbit, Prism, SynFutures, Zcash

: Sequoia Capital is one of the top venture capital firms in the world. It has an excellent reputation for its track record of investing in some of the most successful tech companies, such as Apple, Google and LinkedIn. Its reputation for spotting and nurturing early-stage startups has earned it a great deal of respect from entrepreneurs, investors, and the tech industry in general.

: Caldera, Handshake, Multis, Privy, Strips Finance

: Polychain Capital has a generally positive reputation worldwide. It has proven to be one of the best venture capital firms in cryptocurrency and blockchain, and industry experts have widely praised its investments and partnerships. The company has also received numerous awards for its work, including being named one of the top 50 venture capital firms of 2018 by 

: Bitcoin, Ethereum, Tezos, Polkadot, and Cosmos

: Ava Labs, Kollider, Orca, River Financial

: Binance Labs is a blockchain incubator and venture fund created by Binance, one of the world's leading cryptocurrency exchanges. It has a major following in the industry for its commitment to helping startups succeed in the crypto and blockchain space.

: Aptos Labs, Improbable, Sky Mavis, 1inch Network, CertiK

Intermediate

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15 Crypto VCs Active in Crypto Projects Investment (2023)

These Ethereum Layer 2 solutions which include Polygon, Mantle and Loopring, are some of the most promising projects that you should take a look at post-Ethereum Merge. 

 mainnet completed its transition from the proof of work (

) consensus mechanism to proof of stake (

," the transformation of Ethereum from the PoW to PoS consensus layer was a highly anticipated event. The transformation has positively affected the price of various Ethereum-based Layer 2 projects. The price of Polygon, one of the most popular Ethereum Layer 2 solutions, rose by 36%. Meanwhile, Optimism registered an increase by over 60%. Investors are also awaiting subsequent developments such as the 

, which would likely push the price of Layer 2 projects further.

So, what are some of the top Ethereum Layer 2 solutions you should consider investing in post-merge? Let's find out.

 protocols are solutions designed to solve the scalability issues related to the main Ethereum base blockchain. Layer 2 is attached to the Ethereum 

 blockchain, which enables it to perform blockchain operations and report them to the main chain.

You can think of these Ethereum Layer 2 solutions as roads leading to the main Ethereum highway. When the Ethereum network gets congested due to high traffic, Layer 2 helps by offloading the traffic to the roads. Ultimately, the congestion is reduced. 

Since Ethereum has reached its capacity of one million transactions per day, the various Layer 2 protocols help Ethereum increase transaction speed without sacrificing decentralization or security. Among other benefits, they also contribute to lowering gas fees and letting developers create new applications with improved user experience. 

In the last two to three years, various Ethereum Layer 2 solutions have emerged. State channels, plasma and rollups are some of the well-known techniques. Each of these has its advantages and limitations. Following is a brief overview:

 allow users to transact with one another outside of the blockchain, enabling instant peer-to-peer Ethereum transactions. While state channels offer high transaction throughput, instant withdrawal and low fees, they suffer from cross-chain interoperability. However, the advent of 

 is another popular Layer 2 solution that uses 

 to create almost unlimited sidechains. Since the transaction and the computation takes place inside sidechains, it helps Ethereum handle much larger data sets. Unfortunately, the withdrawal time can range between 7 and 14 days.

Blockchain rollups are somewhat similar to plasma; however, rollups keep some of the data on Ethereum. The unique mechanism helps elevate security and reduce centralization. You can even run an 

 (EVM) inside a rollup. There are two kinds of rollups: 

. In the long run, ZK rollups may prove more practical due to their shorter withdrawal time.

Investing in Ethereum Layer 2 projects makes sense because Ethereum is the most highly anticipated cryptocurrency that may potentially cause the 

 and overtake Bitcoin as the king of crypto. Ethereum Layer 2 blockchains help to quickly solve scalability issues related to Ethereum which may hasten the Flippening process. The recent hike post-Ethereum Merge in the price of native tokens associated with some of the Ethereum Layer 2 projects is a testament to this theory. 

If you're looking for opportunities, consider these 11 well-established and upcoming Layer 2 projects:

 values are as accurate as of date of publishing (Feb 13, 2023). 

One of the largest Ethereum Layer 2 scaling solutions in the cryptosphere, 

 is a sidechain running in parallel to the Ethereum blockchain. Among its main functions are faster transactions and lower transaction costs. You can "bridge" some of your cryptos to Polygon, enabling you to interact with a wide range of decentralized apps (

) that are exclusive to the Ethereum network.

Polygon's main chain is a PoS sidechain, which is used to validate transactions and vote on network upgrades. Developers can easily build additional sidechains using the Polygon software development kit (SDK). At this time, Polygon supports the development of sidechains using plasma, optimistic rollup, and ZK-rollup construction scalability methods.

 is the first modular Layer 2 protocol built on Ethereum that is initiated by a 

, Mantle expands the utility of BitDAO's governance token, BIT. 

Mantle's modular structure processes different transactions and actions in separate layers operated by network participants at different levels via Ethereum rollups and a decentralized data availability layer. This enables high throughput on lower gas fees with Ethereum-grade security, derived as a result of a restaking mechanism, for any application built on Mantle.

Mantle also aims to decentralize the sequencer, thereby allowing for multiple Sequencer nodes to operate and receive BIT rewards. This reduces the security and operational risks typically faced in existing rollup models.

 seeks to resolve congestion on Ethereum through its high transaction speed of 40,000 

 (TPS) costing about two cents or less in fees. 

The smart contracts on Arbitrum are validated using optimistic rollups. However, Arbitrum stands out for EVM compatibility. It means that DApp developers can build their apps within the Arbitrum mainnet without learning a new coding language. For instance, if you already know the coding language used for developing smart contracts on Ethereum, you don't require additional skills.

Arbitrum doesn't have a native token. Until a native token is introduced, the most direct way to invest in Layer 2 is by investing in projects that are native to the rollup. 

As the largest DeFi project on Arbitrum, 

 is a viable candidate worth investing in. 

 of the decentralized GMX exchange. Deployed on Arbitrum, the exchange is a spot and perpetual contract decentralized exchange (DEX) with outstandingly low fees and zero slippage. 

 is a major competitor of Arbitrum. While it's somewhat similar to Arbitrum, Optimism uses the optimistic rollups introduced by the Optimism Foundation. These optimistic rollups assume that every transaction is valid. Any fraudulent transaction is rolled back after participants submit 

Both Optimism and Arbitrum are similar because they only deploy when faulty blocks are identified. Accordingly, tokens on these networks can flow between Layer 1 and Layer 2. The mechanism to confirm a block is also identical. 

Besides enhancing the scalability of the Ethereum ecosystem, Optimism helps maintain the security of transactions. Individual nodes on the network put a stake to suggest a new block, and each note has the power to challenge the validity of the transaction.

Optimism is a good alternative to invest in since Arbitrum has no native token. 

 (NFTs) on the Ethereum blockchain. This Layer 2 offers 

 gaming developers a way to launch NFT projects quickly with near-zero gas fees and scalable features. 

The technology uses ZK-rollup. Instead of dumping all the transaction data on the blockchain, the system batches together hundreds of separate transactions into a single zero-knowledge proof known as ZK-STARK and processes the transactions off-chain.

Immutable X is also the first ZK-rollup technology that solely focuses on NFT projects. The unique mechanism requires less storage and computing resources to validate an entire block of transactions. NFT projects benefit from the speed because the network can accommodate over 9,000 NFT trades each second. The zero gas fees for minting or launching a 

ecosystem is an added incentive for developers. 

 is an upcoming Ethereum-based Layer 2 blockchain that will boost the utility of the famed 

, has gained enormous success mainly due to the hype created around the concept. Despite the growth, the community always wanted an ecosystem that could sustain its growth in the long term. The debut of the Shibarium L2 layer is the answer to such concerns. 

The sidechain will take over a large portion of the SHIB transactions, so SHIB doesn't have to rely on the Ethereum network. As a result, users will likely experience massive improvements in transaction speeds along with gas fee reductions.

The prices of SHIB and related Shiba Inu tokens are already increasing in anticipation of the launch. If you're a fan of Shiba Inu, it should be a no-brainer to consider SHIB and other tokens in the SHIBA ecosystem. BONE, the governance token of 

, Shiba Inu's DEX, is another logical choice to invest in as it is slated to become Shibarium's utility token.

 is a Layer 2 scaling protocol that facilitates noncustodial order book-based DEXs and payment protocols. Deployed in December 2019 on the Ethereum mainnet, it is reputed to perform more than 2,000 TPS while maintaining the same level of security as Ethereum. It uses ZK-rollups for the payment system that lets users exchange digital assets such as cryptocurrencies. 

Loopring has tremendous potential to grow further as DEXs and 

 are predicted to flourish in 2023. You can trade LRC as a Spot pair (

 is the execution-layer EVM Layer 2 sidechain to facilitate the development of DApps and NFTs. It uses the xDai 

 to facilitate transactions and pay for smart contracts and gas fees. The native token of the Gnosis ecosystem, GNO, is used for staking on the Gnosis Beacon Chain and for governance in the GnosisDAO. Gnosis Chain is a part of the Gnosis Beacon Chain.

Gnosis Chain was the first Ethereum sidechain solution that had a U.S. dollar-pegged stablecoin as a transactional token. The main goal of the Gnosis Chain is to provide stable, low-cost and optimized transactions for Ethereum-based projects. By focusing on specific goals, the chain can offer developers 100% uptime, $0.0001 per 100K gas, and 5 seconds of block time. 

According to the official website, the Layer 2 blockchain is secured by over 100K validators delivering a yield of almost 16% on staked assets. It takes only $117 to validate with Gnosis Chain. Its advanced technology, simple concept and strong governance make GNO a viable candidate for future growth. 

 is a Layer 2 web3 network that is highly interoperable, allowing developers to create a variety of DApps on the SKALE elastic sidechains instead of the Ethereum mainnet. It is a highly scalable infrastructure that creates an environment suitable for implementing multiple protocols, virtual machines and enhanced security measures.

It is perhaps the largest Layer 2 blockchain network, which is capable of running an unlimited number of fast, on-demand, pooled-security blockchains with zero gas fees. At the time of writing (Feb 8, 2023), the market cap of SKALE is $177.6 million. 

SKALE operates in an integrated manner with Ethereum while running its own consensus mechanism. Accordingly, developers can create an unlimited number of configurable SKALE chains that are independent of each other. All of these independent chains are interoperable and EVM-compatible, which means that anyone can easily deploy existing Ethereum-based smart contracts directly on SKALE chains. 

According to its founders, SKALE can process 120,000 TPS using SKALE’s modular architecture comprising 1,000 chains. Without a doubt, the unique architecture holds a lot of promise that can make SKALE flourish. 

 on the Bybit exchange as a USDT Perpetual (

 is a decentralized ZK-rollup that operates on a Layer 2 network over Ethereum. StarkNet uses Validity Proofs called STARK-Proofs that are produced off-chain and validated on Ethereum. Validity Proof is a form of ZK-Proof that lets a party prove that a computation is executed correctly, thereby maximizing privacy and security for the transaction data.

, you can still benefit from StarkNet's growth by investing in the projects built on it. Immutable X as mentioned above is one such project. Another logical investment choice is 

, an order book model DEX built in early 2022. 

Best Layer 2 crypto, Ethereum Layer 2 projects

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11 Best Layer 2 Crypto Projects To Check Out Post-Merge (2023)

A crypto pullback could indicate a good opportunity to accumulate wealth. But can you spot a pullback accurately? Find out now. 

Cryptocurrency markets can be highly volatile, with prices rising and pulling back rapidly. Knowing what to do with your investments can be tricky during a market pullback. Having a clear understanding of the risk-on-risk-off market shift to manage your investment in response to global economic changes properly could alter the return on investment results. And having plans to deal with market downturns is ideal. 

This article will explore crypto market pullbacks and strategies for navigating them.

Why Are There Market Pullbacks in Crypto?

Some of the most common reasons pullbacks occur in crypto markets include the following:

 When the price of digital currencies rises significantly, some investors may choose to sell their holdings to lock in gains. This selling pressure can cause the price of the crypto to decline temporarily.

 Negative news or events, such as a hacking incident, regulatory crackdown, or controversy involving a particular coin, could lead to a brief drop in the price of that coin.

 A decline in trading volume or a move below a key support level can lead to a pullback.

 When market sentiment turns negative, and FUD (fear, uncertainty, doubt) dominates, investors are more likely to panic sell, which can drive prices down.

Are Crypto Pullbacks and Traditional Finance Pullbacks the Same?

Crypto and traditional finance pullbacks are similar in some ways, but there are also some key differences.

Both crypto and traditional finance pullbacks can be caused by profit-taking, negative news or events, technical factors, and market sentiment. In both cases, an asset price decline usually occurs when there is increased selling pressure.

However, crypto markets are highly volatile compared to traditional financial markets. Crypto prices can fluctuate quickly, while conventional finance markets tend to be more stable in the short term and experience more gradual changes in price. Analyzing the past performance of the asset class should give a better overview to strategize your trading strategy.

Another difference is the level of regulation and oversight in the crypto market compared to traditional finance markets. The crypto market is still relatively uncharted territory, and a higher risk and uncertainty are associated with investing in crypto assets.

Additionally, the mainstream acceptance of both markets is different. Traditional finance markets are more stable and predictable as they have been around for longer, with a more established track record, market structure, regulation, and investor base. While the crypto market is still relatively new and uncertain, mass adoption could stabilize it.

A cryptocurrency pullback typically lasts for a few trading sessions; anything longer could be considered a reversal.

To identify a pullback, you can look for a decline in the price of a cryptocurrency after a period of price increases. The drop should be more significant than a typical day-to-day price fluctuation, and the price should remain below the previous high for a considerable period. 

However, note that a pullback is different from a downturn, which is a sustained decline in the market over a longer time. A downturn is characterized by a prolonged period of 

 conditions, often lasting for months or even years.

The market decline is typically shorter during a pullback, and it's often considered a normal and healthy part of any bear and bull 

. A pullback usually indicates an opportunity to accumulate assets at a discounted price. On the other hand, the decline is more pronounced during a downturn as the assets have mostly lost significant value due to negative market sentiment.

The Difference Between a Reverse vs. Reversal vs. Pullback

The terms "reverse," "reversal," and "pullback" all refer to changes in the direction of a market or an asset's price, but they take on slightly different connotations.

A "reverse" refers to a change in the direction of a trend. For example, if a cryptocurrency has been experiencing an uptrend (i.e., its price has been steadily increasing), a reverse would occur when the price starts to decrease. In this case, the trend has changed from an uptrend to a downtrend.

A "reversal" refers to a trend change expected to be sustained for longer. Most reversals are often a more enduring change in the market and are often seen as a confirmation of a new trend.

A "pullback" refers to a temporary decline in the price of an asset after a period of increase. Considered a normal part of a market cycle, pullbacks are less severe than a reversal, and the price tends to recover rapidly after a pullback.

While these terms are similar, they represent different scenarios — "reverse," and "reversal" often indicate that the market's direction has changed for the long haul. At the same time, "pullback" usually implies that the market's direction has temporarily changed and will return to its previous trend.

What Are The Pullback Trading Strategies? 

A pullback trading strategy entails buying assets at a lower price during temporary market drops. Most long-term investors would take advantage of short-term uncertainty while hoping to benefit from the long-term uptrend.

A stop-loss pullback trading strategy is a method of buying an asset after it has experienced a significant price drop, with the expectation that the asset's price will rebound. The idea is to buy the asset at a lower price after a temporary setback and then sell it for profit once the price has recovered.

, which is an order to sell an asset if its price falls to a certain level. A stop-loss order limits potential losses if the asset's price drops further after being purchased.

An investor notices that Bitcoin is trading at $10,000. The market sentiment turns bearish, and the price drops to $9,000 within a week. The investor then decides to buy Bitcoin at $9,000 with a stop-loss order at $8,500 (if the price reaches $8,500, the investor will automatically sell), with a target price of $9,500. After a couple of weeks, the market sentiment improves, and amidst positive news about the record institutional adoption of Bitcoin, the price reaches $9,500. The investor sells his holdings for a $500 profit.

A take-profit pullback strategy is a method of trading where an investor or trader sets a target price at which they will sell an asset to lock in profits. Traders typically use this strategy in conjunction with the pullback strategy. 

Once the asset reaches the target price or "take-profit" level, the investor or trader will sell the asset to lock in the profits. The idea behind this approach is to take advantage of market fluctuations to buy low while having a pre-determined plan to sell the asset once a certain profit level has been reached.

Here's an example of how a take-profit pullback strategy might work in practice:

A trader identifies a digital asset that they believe is undervalued and has strong long-term growth potential. The coin is currently trading at $50 per unit, but the trader thinks it may ultimately reach $70. The trader believes the digital asset's price is temporarily depressed due to market uncertainty and sets a take-profit price at $60. The trader uses a pullback strategy to buy the digital asset at $50 per unit. After a while, the coin price reaches $60 per unit, the trader sells it to lock in a $10 per unit profit. 

How to Enter a Market During a Market Pullback

Entering a market during a pullback can be an excellent way to buy assets at a discounted price. Here are ways of taking advantage of the pullback using Bitcoin as an example:

 The first step is to identify that a pullback is happening. You can look for a decline in the price of Bitcoin after a period of price increases. You can use charts and technical analysis tools to help you identify the pullback.

 Once you've identified the pullback, you'll want to determine key 

 levels. Support levels are prices where buyers are expected to step in and prevent further price declines. In contrast, resistance levels are price levels where sellers are expected to take profit, preventing further price increases.

 Once you've identified key levels, you can place entry orders at or near the support levels and stop-loss orders at or near the resistance levels. This allows you to buy the asset if it reaches the support level and will limit your losses if it reaches the resistance level.

: After placing your entry and stop-loss orders, you will wait for the order to be filled. The price of bitcoin may not reach your desired entry point, so you must be patient and wait for the right opportunity.

 Once you've entered the market, you'll want to monitor your investments closely to ensure that they perform as expected. Keep an eye on relevant news and events, and use technical analysis tools to help you stay on top of the market.

During a crypto pullback, one strategy could be investing in 

, well-established digital assets with a strong track record and a large market capitalization. These cryptocurrencies are less risky than other digital assets and can be a good option for those looking for more stability. Examples of blue-chip cryptocurrencies include 

 (NFTs) during a pullback. NFTs are unique digital assets stored on a blockchain, representing digital art, collectibles, real estate, virtual land, and many more. NFTs have been gaining traction, and a pullback could be an opportunity to invest in high-quality NFT projects with a strong track record and an established community.

Pullback trading in cryptocurrency involves buying an asset after a period of price decline in anticipation of a rebound in the asset's value. While pullback trading can be profitable, it is risky because cryptocurrency prices can be highly volatile and subject to various factors. 

Additionally, predicting the timing of a pullback and the subsequent rebound can be challenging. It is imperative to have a well-thought-out strategy and a solid understanding of the market before attempting to engage in pullback trading in the crypto ecosystem. 

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What To Invest In During A Crypto Pullback?

Want full control of your cryptocurrencies? Snag these best noncustodial wallets for ultimate ownership and security of your crypto assets.

adoption is on the rise, and with it the vital question of how to securely store the keys that unlock access to these digital assets. While enthusiasts might point to the best noncustodial 

 for maximum security and ownership, it can be daunting for beginners to dive right in without understanding the importance of custody. For starters, cryptocurrency storage falls under two broad categories: 

Custodial storages are wallets that cede control of your private keys to another party. You trust a third party to keep your assets secure and give you access whenever you need to trade them or move them somewhere else, an arrangement similar to keeping your money with a bank. While custodial wallets afford you convenience and ease of usage, trusting someone else with the security of your assets does come with the risk of loss. 

The safer alternative is a noncustodial wallet. This way you have sole control of your private keys and, by extension, your digital assets. But being in charge of your cryptocurrency means you are solely responsible for securing your keys and staying on top of the security of your assets. 

This article explores the best noncustodial wallets and the features that earn them that honor.

A noncustodial wallet allows you to own and control the private keys to your cryptocurrency. This gives you full access to your funds.

The underlying principle is that users control the private keys to their accounts. The noncustodial wallet provider shouldn’t have any access to the keys, and therefore can’t freeze or manage your assets in any way. For clarification, wallets don’t actually store cryptocurrencies. They merely hold the 

, and provide users an interface to interact with their digital assets, which are decentrally kept on the public ledger or blockchain.

This leads to the question: Why use a noncustodial wallet? 

While allowing a third party to manage and secure your cryptocurrencies is convenient, giving up control can create susceptibility to exit 

, a leading Bitcoin exchange that filed for bankruptcy in February 2014. Mt. Gox announced that about 850,000 

belonging to customers and the company — valued at approximately $450 million then — were missing. A security audit revealed that the missing bitcoins were stolen directly from Mt. Gox cryptocurrency wallets starting in 2011.

Another custody disaster was the story of 

, which used billions of dollars of user funds and eventually declared a 

, resulting in heavy losses to users who had funds inside FTX. Sales and usage of noncustodial wallets spiked greatly after this incident.   

Apart from the catastrophic risk of loss stemming from handing over control of your assets to a third party, as illustrated by the Mt. Gox and FTX debacle, there are other reasons to use a noncustodial wallet.

wallet provider can impose a maximum withdrawal limit or unilaterally set fees for using their services. You can temporarily lose access to your crypto if the platform has technical issues. Basically, your assets are at someone else’s mercy if you don’t own your keys. After all, as they say, “not your keys, not your coins.”

On the other hand, a noncustodial wallet gives you complete charge of your hard-earned digital assets. You set your own rules and do with your funds as you wish. However, you alone are responsible for the 

. Hence, choosing from the best noncustodial wallets is critical.

What’s the Difference Between Hardware and Software Noncustodial Wallets? 

Hardware wallets are secure and simple devices that store your cryptocurrency offline so you can’t be hacked. Also known as 

, they look like small external drives and are independent of online exchange platforms. Hardware wallets require you to plug them into a device before you can access your cryptocurrency.

Software wallets are applications that you can download on your computer or mobile device. They are also known as hot wallets as they are online and have more vulnerabilities than cold wallets. They store your private keys, and provide an interface for you to trade and manage your crypto. Software wallets are encrypted and require a password to access the keys that are stored in them but are susceptible to 

When it comes to deciding between either of these best noncustodial wallets, investors tend to have differing opinions. By virtue of their offline status, hardware wallets are more secure than software wallets. Thus, these 

 are better for storing large amounts of crypto. On the other hand, software wallets are connected to the Internet, so there’s a theoretical risk of possible breach or attack. However, they offer more convenience and are well-suited for users who transact frequently and need quick access to their assets.

The principle behind the best noncustodial hardware wallets that makes them superior security-wise is that they’re fully isolated. This separates them from your highly vulnerable computer or connected device. Here are the hardware wallets worth considering.

When it comes to the best noncustodial wallets, 

 is the most recognizable. It's the established and reputable company behind the popular Ledger suite of hardware wallets. Your Ledger wallet is accessed through Ledger Live, a proprietary free desktop app that enables you to send and receive cryptocurrencies and check your balance, and gives you complete control of all your Ledger devices. Ledger currently offers two hardware wallets: Ledger Nano X and Ledger Nano S Plus. 

: This is Ledger’s flagship wallet device. It’s remarkable for its ability to manage over 100 crypto assets simultaneously, and it supports over 1,800 tokens. The Ledger Nano X features an 

 display and Bluetooth support, which means you can confirm your transactions on the go without the hassles of connecting a USB cable. 

The Ledger Nano X is a bit pricey at $149, but it delivers solid security for your digital assets in a sleek and robust package. 

: With an affordable price tag of $79, the Ledger Nano S Plus offers the best bang for your buck. It comes with a user-friendly interface and clean design and provides support for a wide range of cryptocurrencies. 

 wallet is a well-designed, although relatively large, hardware wallet from 

. It features an easy-to-use interface in a solid, durable device. KeepKey’s stand-out feature is an in-wallet crypto exchange that allows you to trade between cryptocurrencies without resorting to an external exchange. 

KeepKey stores all private keys with the industry-standard BIP32 protocol. For added security, KeepKey requires you to authorize each transaction manually, using a button on the device.

KeepKey currently retails for $49, which is an excellent deal, considering the wallet is feature-rich and beginner-friendly.

On the downside, KeepKey supports only 40 cryptocurrencies, far fewer than other best noncustodial wallets on this list for crypto storage.

Trezor pioneered the best noncustodial wallet market with its hardware crypto wallet technology, and it consequently has a solid reputation in the industry. Trezor wallets are unique in that they’re the only hardware wallets to offer native support for ERC-20 tokens. On the flip side, updating the firmware on Trezor wallets often causes the whole wallet to be deleted. This can be scary for a new user; however, you can easily enter your backup phrase and restore your wallet quickly. Like Ledger, Trezor offers two hardware wallet devices: Trezor Model One and Trezor Model T. 

: The Trezor Model T shares the same features as the Trezor Model One, except for its newly introduced large touchscreen. The touchscreen is an important upgrade since it allows users to enter their seed phrase directly on the device without going through a computer. Your computer could be infected with malware, which would make entering your seed phrase on it very risky. By only allowing you to enter the seed phrase through the touchscreen, the Trezor Model T removes all threats of hacking since the device isn’t connected to the Internet and is therefore malware-free. The Trezor Model T also supports more coins than the Trezor Model One. However, it’s a bit pricey at $219.

: The Trezor Model One is the earliest hardware wallet on the market and still the most reputable. It features a clean design with a user-friendly interface and supports over 1,000 cryptocurrencies. You can get the Trezor Model One for $69, which makes it quite affordable.

 allow users to manage their crypto assets through a straightforward and protected interface. 

Users will never lose access to their keys because the smart contract markup is both human-readable and accessible through a secure screen and a dedicated safe enclave. Cryptocurrency stored in your Lattice1 can be accessed by connecting it to a compatible software wallet, such as 

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