The crypto space is like a deep sea: you will find many sharks ready to eat you on your journey. But there are also big treasures hidden at the bottom of the sea.
How can you find them?
Before investing in any asset, it is important to conduct deep research to find out good potential assets. You do not want to throw your money out the window like a gambler, right?
So let us start to look at the most important parameters.
1. Have a Look at the Project's Underlying Idea
This concept is the representation of very well-mixed things that are important for the success of a project.
The most important things here are the following:
Real problem-solving- Opportunities and success come from those who can solve an issue. Consider DeFi platforms that are trying to solve the issue of centralized finance, for example. Your goal is to find projects that are pushing for new solutions.
Innovation and saturation of the market: Plenty of projects are working in the same sector. Which are the probabilities of finding the right one? Always look for groundbreaking innovations and sectors with fewer competitors to increase your probabilities.
Future Prospects: Remember that crypto projects are, first of all, businesses; as such, they need to earn money. Try to figure out which are the future economic prospects and if the business is sustainable in the long run. Sustainability is key.
These parameters are the first that you must check when you're doing research into an altcoin project. Try to understand where it is headed, its mission, and if it could be a leader avoiding the risk of possible competitors.
2. The Team
The team is another fundamental parameter to spend time on. Many times we have seen scammers or lazy teams that do not deliver. If the idea is the body, the team is the heart. Without a good team, achieving goals and building a successful project is impossible.
You may have to look out for the following:
Doxxed teams: If members are anonymous or do shady things, forget about it. Remember that you are investing in a company. Would you like to give your money to fraudsters? Go on their website/Twitter to read about the team.
Partnerships + marketing- Solid partnerships help achieve goals faster while marketing is important to inform people about the project. Ensure the project has enough funds to sustain the marketing campaign, and do not waste money.
Frequent updates and informative news about developments: Always look for a team that informs the community about updates and milestones. Keeping the community updated is a big sign of good business management.
Strong community: a strong community is crucial to understanding how much people believe in a project. Furthermore, it helps people better understand a project, forming new potential holders and buyers. Successful projects always have strong communities.
3. Token + Tokenomics
The majority make bad similarities between the stock market and the crypto market. When you buy a token, you are not buying a share, and without proper tokenomics, success is not guaranteed, even if the project is good. That is something you need to remember.
TVL means total value locked, which is a good measure to gauge the health of a DeFi ecosystem. It includes all the coins deposited in all the functions that DeFi protocols offer, including staking, lending, and liquidity pools.
This is a very important metric that, most of the time, is underestimated.
4. Liquidity
The circle of liquidity is made of two big things:
An exchange where you can buy the coin: Fewer exchanges also mean less liquidity and less access for people. Additionally, you may need to remember that having enough liquidity for sell/buy operations is important.
Potential major exchange listing: when a coin is listed on less-known exchanges, the listing on a major one can insanely boost the price. This is common in crypto, so consider it when you choose an altcoin.
5. Price
It doesn't matter if you found an outstanding project. You never buy a token when the price action is parabolic if you don't want to lose money. You start buying during the accumulation period.
6. Justified/ Not Market Cap.
Many projects have an inexplicable market cap for the value they provide to the market and the world. Most do not deserve where they are in the market cap, and most deserve much more than they currently have. It might take a long time, but if an altcoin has red flags, it will decrease over time. Many projects are positioned higher in market cap only due to speculation.
7. Risk/Reward
How much ROI do you need to be satisfied with your investment? Set mental targets. Also, notice that mid/low caps are risky plays but have much more upside potential than a higher cap. If you pick a high cap, you cannot expect ×50/×100. It is nearly impossible.
Final Thoughts
It is important to know that altcoins have higher risks than $BTC. The more we go down in marketcap, the more risks we will find. More volatility and less liquidity. You need to fix it in your head and always think about it.
We could have major control over our investments if we can count on strong fundamentals. Fundamentals allow you to relax cause if a project is working hard, you do not have to be worried about price movements. Fundamentals will always catch prices sooner or later.
Also, remember that you do not have to flip/flop chasing pumps between projects you like; that is a recipe for disaster. Hold and reap the rewards when they come. The market will shift towards you if the project's FA is solid enough.
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