how to research crypto: A step by step guide to doing your research in cryptocurrency

how to research crypto

However, like all public forums, Twitter is full of people with opinions, many of whom are shilling and promoting the coins in their portfolios for personal gains. Engage different accounts to gauge different opinions on the projects, look through the comment section and follow hashtags related to the project to get a 360 view of it. A high allocation of tokens to internal team members or investors makes the token vulnerable to a few large holders and highly centralized.

  • There are two paid subscription options, which are $29 per month and $799 per month, both paid annually, which provide additional tiers of data and more frequently updated information.
  • Most white papers define a problem that is being solved with the advent of the currency itself, and this problem and solution should be crystal clear to investors.
  • Dig deeper and find out why the people behind the project think that what they do will help to solve an existing problem.
  • It’s also good to see how big the supporting team is, whether they have any notable strategic partners or investors, and where they’re based.
  • Perhaps a small group of people hold a big percentage of the tokens, or there’s no limit on how many can be minted.

Websites are a good way to start, especially when you need high-level information on the project. You can find things like market cap, trading volume, price history, charts, and so on, on crypto-focused websites. If a white paper is vague or uses too many obscure terms you don’t understand, it may not be worth your time (and money) to invest in that project. If you don’t have the time or patience to go through multiple white papers, you can also check out the projects’ litepapers. These are abridged versions of white papers but are just as informative. Understanding the project’s vision, tokenomics, white paper, use cases, roadmap, etc., is essential prior to making an informed investment decision.

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It is almost impossible to time the market and buy at the absolute low, but you should still look at the crypto’s historical performance. Perhaps the price shot up early in 2021 before slumping, never to pick up again. Maybe it’s followed broader market trends or just hit an all-time high.

how to research crypto

Tokenomics refers to the economic model of the project and how the token will be used within the ecosystem. For example, if a token is only being used as a means of payment, then its value will likely fluctuate along with the market. One important fact to follow is a coin’s transaction volume over a given period.

Researching the team

Road maps help you to understand what a crypto project wants to achieve in a given timeframe. Keep in mind that software projects are often very complex so delays happen frequently. You need a clear understanding of what this crypto project is about, the industry it is aiming for, and what issues it tries to solve. I researched over 100 cryptocurrencies and projects and learned a lot about how to make money in the crypto space.

All your sources of information are advising you to do your own research before investing, and this is sound advice. The Crypto industry is an economic experiment happening in real-time, and more often than not, the market can act irrationally. Market participants (investors) need strong, clear, and measurable incentives not to panic sell in the event of a downturn or “FUD” (fear, uncertainty, and doubt). If their sentiment towards the investment is not one of the community but zero-sum, then you can expect massive dumps at irrational moments that would otherwise not require such action.

how to research crypto

While you won’t know or recognize every board member or supporting company, you should be able to look them up to verify that they are real and genuinely involved. It’s also wise to look into how much of the currency its key stakeholders own, where they are based, whether they have a supporting team, and who notable investors are. However, it’s important to be aware that trade volume by itself is not a gold standard, nor should you look at the trade volume listed on just one exchange or analytics site. Recently, research by Forbes found that half of Bitcoin trades reported by exchanges were the result of wash trades.

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If the market cap of a coin or token is very small, it means the price can be easily manipulated by the people who accumulated a lot. Established partners are vital for any crypto project because they help the team to tap into additional resources, get publicity, and learn from their experiences. For a majority of new or smaller coins in the crypto space, information is not as conveniently accessible as with the big and established platforms. After gaining enough knowledge and experience with large-cap cryptocurrencies (also try buying and selling small amounts), you will probably want to explore smaller cap projects. By now there are thousands of different projects and coins in the crypto space. When I started investing in crypto, I made a common mistake that most beginners share.

how to research crypto

The Network Data Pro plan lets you access over 100 assets and 400+ metrics, including novel ones like free float supply and realized cap. CMC is widely referenced by financial news organisation all across the world and is one of the most trusted source of crypto data by retail users and institutions too. The acquisition allows CMC to tap into more data sourced from Binance’s own repositories about crypto projects and enable users to get more information regarding the same. Reviewing the price history of a cryptocurrency can help investors see how interest in the project has evolved over time.

Find Out if the Coin Seems Sustainable

When evaluating a crypto project, it’s important to ensure that it has a strong and achievable vision. In crypto, there’s such a thing as “vaporware,” which often refers to projects with all the bells and whistles — but are unlikely to get off the ground. When evaluating a crypto project, be wary of those that seem too cool and promise too much without having a solid plan or foundation to back it up. Your fiat or crypto is converted into our native token, RBIS and used to generate profits from crypto arbitrage.

If you’re interested in certain events that you think will likely impact a specific crypto price, for example, simply search the coin on the platform. With a few clicks, you’ll see all the listed events for the selected period. LunarCrush reserves the most comprehensive platform features, data and rewards to those who contribute to the community. LunarCrush Pro members stake, or hold, 2,000 lnr on the platform in exchange real-time alerts, on-chain portfolio indicators and other features, plus 5% annual percentage yield on their holdings. Cryptocurrency is a community-driven technology that typically requires a strong, supportive community to grow.

  • Cryptocurrency can be a smaller part of a larger investment portfolio, characterized as a risky asset with more volatility than most investments.
  • Here are 10 of the best research tools that you can use to refine your research before investing in cryptocurrency.
  • Realize that we are still in the very early days and that there will always be other great opportunities.

Most crypto projects have a clearly defined executive team that handles the vision, execution, financials, and marketing of the company. Learning more about who is leading a cryptocurrency team can give insight into the probability of success for a project. White papers are usually very technical and may contain a lot of details that average investors may find hard to understand, but reading the white paper of a project is always advisable.

And to further add to that, there isn’t a lot of history to this space either. While this same level of reporting is unlikely to be available, before investing in a digital asset, you should understand what problem the coin solves and whether there is demand for it. Doing so will help you determine whether the underlying project has real value. Before putting your money into a particular cryptocurrency project, familiarize yourself with one or two tools.

What does the project’s road map say?

Because in the end, this is all about protecting your investment and avoiding mistakes I made a few years back. I lost a lot of money because I thought it was not worth spending some time to make sure a project was legit. As a result, you should have a clear understanding of various things such as wallets, addresses, private and public keys, how transactions on the Bitcoin blockchain work, etc. If you are new to crypto, I strongly recommend that you start your journey with big and established currencies such as Bitcoin and Ethereum. That’s because there are lots of resources on the internet to explore and most of them are free.

Hopefully this guide to crypto research strategies will help you in determining what crypto to buy now and in the future. If you believe the source is credible, consider the tactics below as you develop your own crypto research strategies. The Pro membership includes daily insights and long-form research, plus advanced screening, charting and watchlist features. Erika Rasure is globally-recognized as a leading consumer economics subject matter expert, researcher, and educator. She is a financial therapist and transformational coach, with a special interest in helping women learn how to invest. The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.

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