How to detect a promising Crypto? 3 expert tips from our free ebook

Today there are more than 5,000 cryptocurrencies on the marketAccording to cryptocurrency market capitalization aggregators, more are being launched every day, making it difficult for investors to decide which ones to invest in.
However, many are window dressing only. Scammers have seen the potential opportunities in the emergence of cryptocurrencies and have designed certain tokens to do so stealing money from novice or naive investors.
So let’s talk about a “scam”. Whether you are a beginner looking to invest in the cryptocurrency market or an experienced investor, below are some techniques that will guide you in analyzing any cryptocurrency.

1) The state of the market

The first step before investing in a project is to research the project on a cryptocurrency aggregator.
The two largest cryptocurrency aggregators are CoinMarketCap and Coinecko.
These sites provide a high-level overview of the project: transaction history, cryptocurrency ranking, brief description of the project.

  • CoinMarketCap is the best known
  • CoinGecko is known for small cap projects

Check the ranking of the project

Checking the project ranking allows you to quickly assess where the project stands against all other cryptocurrencies.
Depending on your investment style and preferences, you may only be interested in projects ranked in the top 100, which they exhibit
usually the least risk.
However, if you are looking for those lesser known “nuggets” with huge growth potential, you will probably want to look for projects ranked in the top 1000+. Projects rated between 5,000 and above are generally considered to be high-risk projects and should be avoided in most cases.

Rating: coinmarketcap.com

Market capitalization, trading volume and liquidity …

The ranking of the project is determined by the market capitalization, which is calculated by multiplying the current Coin / Token price by the total number of Coin / Token in circulation. In general, the higher the market cap value, the less volatile the investment and the safer it is (relatively speaking).
The trading volume is the quantity bought and sold during a given period. Even a low trading volume of a mid-cap project can be a indicator of a project that has been abandoneda lack of real-world use or a small community, to watch out for.

2) Visit the project and its website

If the initial review of the project details on the cryptocurrency aggregator’s site like Coinmarketcap looks positive, the next step is to check the project’s website.
Today it is very easy and relatively inexpensive to develop a clean and functional website.
If the site is low quality, misspelled, reluctant to reveal itself to team members, or worse yet, it’s a copy and paste of a previous project, there’s cause for concern and avoidance.

For most projects, especially newer ones, the team and developers involved in the project are the most valuable resources.
It is the credibility and experience of the team behind the project that will have a direct result in the success or failure of the project. It is for this reason that it is particularly risky to bet on listed projects the team is not disclosed openly.

Check the project team (developers, partners, consultants)

When evaluating the team, determine previous experience in the market and previous projects. Is this their first project or do they have a solid track record of developing successful projects in this market?
Unfortunately, many small projects are known to tamper with their team (using AI-generated photos), so simply taking what the website says by face value isn’t enough. If social media profiles from LinkedIn or other teams are provided, it is always a good idea to follow up and verify their authenticity.

The importance of the Road Map and the vision of the project

As an investor, you are interested in the future potential of the project, including its future objectives and its short, medium and long term vision which are also essential elements of the evaluation.
A solid project will have a strong and well-defined vision with a Road Map and dates attached that provide details for development at each stage. It goes without saying that without a clear vision and road map, the future success of the project is in doubt.

Check for Investors

Does the project already have investors and if so, who are they?
A good sign are the projects in which well-known investment companies have already invested. These companies often specialize in specific niche markets and in case they have already invested there is a good chance that they have also demonstrated a global survey and believe in the project.

3) Social networks, a crucial importance

Twitter

The project’s Twitter page is the first stop on the social media tour. Thanks to Twitter it is possible to get an idea of ​​the social activity of the project and the most recent tweets. Observing the interaction between tweets is also a good measure as is the number of followers on the Twitter account.

Telegram and discord

Telegram and Discord are discussion groups that can give an even deeper insight into the project, the team and its community. The number of followers is a good indicator to follow.
Within focus groups, take the time to read the posts and get an idea of ​​the type of people interested and involved. Have their questions been answered?
Groups that engage in a certain way excessive in psychological tactics such as injecting “fear of being lost” (FOMO) should be considered red flags.

Reddit

Reddit is a very interesting social network in the cryptocurrency universe. You’ll always find a subreddit, because if the token has potential, there’s almost always a discussion on Reddit about it. In case Reddit isn’t talking about it yet, either you’re really ahead of the project or it’s a potentially risky project.

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