Since you plan to venture into crypto trading, your next question in mind might be how to evaluate cryptocurrency? The upsides of cryptocurrency should be taken advantage of by more investors since they will get substantial profit gains. It would be best if you did not make any lousy investment. It will not be easy if there are so many downturns. Make a bet and never lose, as they say. in making money consistently, you must do more in picking the best coin.
We should consider factors before placing a bet on a coin, on which coins are potentially growing. Though there are no proper tools to predict the future of a particular coin that can give you absolute conviction, there are few ways on how to evaluate cryptocurrency.
Learn What Makes it Unique.
Truly, prices of cryptocurrency merely depend on speculations rather than evaluation. It may be hard to evaluate prices, but in choosing a coin, it can be. Other than that, its potential will be assessed mainly on its uniqueness than speculations. Sadly, most of the cryptocurrency just copy the most popular coin. They have no unique quality that differs from others, especially in their nature and as well as function. You may check other coins and assess their uniqueness. What separates them from the rest? Are their claims attainable?
To better evaluate a coin, you may put it in a critical study by analyzing how unique it is and how it can handle underlying problems better by providing new solutions. Also, know their vision. Where would they want to take their project? Where do they see it in the future? Let us say after five years, what are the improvements or returns do they foresee. You should check as well in reality if they can deliver what their claim they can. Know their purpose clearly and natural functionality value. If the price is on upsurge due to speculation, it leaves no reason for a buyer to purchase, and it will be a very risky investment.
Know the Team.
It is best if you know who you are going to trust your funds with. You have to check their background. Are they credible enough, and how experienced are they? It would be best if you researched this cause most of the fake cryptocurrencies say that they have some prominent personalities as members of their team. That is why it is better to know the team more if those listed are really part of the team. Once you have checked on the people on the team, a study on their track records as well and how broad their experience is so you can be assured that they can really guide you on the project’s process. Research their previous projects, whether they have done it as a group or individually, and those projects’ success. Lastly, investigate if they partake in any scams or fraudulent activities. This one is very important in evaluating a coin. If the team is suspicious, it may cause you more inconvenience than gains.
- Tokenomics – Refers to the look of a token and set of rules of the economic system for its use. At a basic level, a token with smart “tokenomics” could be a token that becomes fascinating by all stakeholders of the ecosystem: purchasers, users, suppliers, sponsors, and investors. They can be thrilled by the idea of tokenomics, and this can be a way to attract more investors to invest in their coin.
- Supply – Is how many coins have been mined and digitally available for everyone in the market, excluding coins that are not yet mined or those that are not yet available. Circulating supply is essential to determine the potential of a cryptocurrency. Since it varies from time to time, it may increase or decrease in a matter of time. Some cryptocurrency decreases their circulating supply with the hopes to increase their coin’s value and shortage of their tokens or coins.
- Growth – Since most new companies give out information and BETA products, these can be a speculative investment. These investments are vital because they help companies achieve their goals while keeping investors involved in their projects. You must understand that it may be a speculative move, but the possibility of receiving an above-average return on investment needs an in-depth evaluation. Evaluate their projects well as it may define the company’s growth in the coming years.
- Volume – Gives a good indication of cryptocurrency numbers circulating within a time. Make sure to evaluate trading volume when assessing the potential of a coin for the purpose of investment. It is best to analyze these exchanges within a specific period, and it may be 48 hours. Check the volume of total transactions, available supply, price, and market cap to evaluate a coin properly. Assess if a specific coin has value or it is just a speculative resource. Though most of them are, some real supply value other than speculations.
- Market capitalization – Is asset price multiplied by the total amount of assets that are available. Alternatively, you can divide the market cap by circulating supply, and that gives you the price of the cryptocurrency. Its potential relies on the size of the supply that is circulating and the market capitalization. The smaller the supply is, the more we see the team’s efforts quickly and therefore, the quicker that value would rise.
Coin evaluation is mostly intuitive. You may have checked or analyzed many factors but still may get something wrong. But what you have read in this article may help you with how to evaluate cryptocurrency. Having precise information on the use of the coin and its creators will give you more knowledge, you will need to make a decision. You can rest assured that you are in good hands. Learn more about how to evaluate cryptocurrency trading here!