How to identify a promising cryptocurrency. List of rules

2020 saw a new ICO boom. The purchase of tokens during the initial sale brought hundreds of percent of the return to early investors. We tell you what to check for new projects, so as …

2020 saw a new ICO boom. The purchase of tokens during the initial sale brought hundreds of percent of the return to early investors. We tell you what to check for new projects, so as not only not to lose money, but also to earn

In 2020, a new wave of ICOs took place in the cryptocurrency market, which was driven by the excitement around the decentralized finance (DeFi) sphere. Many coins related to it immediately after the initial sale rose in price by hundreds of percent, for example, Polkastarter. But there are other examples when the price of assets after the token sale fell several times, sometimes tens of times.

To make money on investing in new tokens, or at least not to lose money on it, it is important to choose the right promising projects. Well-known representatives of the cryptoindustry told how to do this and what to look for.


Team and product

Development team . They must have knowledge, experience and understanding of the market, this is an important criterion, warns the head of the Six Nines data center Sergey Troshin. As an example, he cited the project of Pavel Durov, whose team in many ways became the key to the success of the implementation of TON and helped to attract investments. Although the project was closed due to a ban issued by a US court.

White Paper . When choosing projects, Troshin advises to study "White Paper". A promising startup must have detailed documentation. It must clearly describe the problem that the developers are solving, and cannot, for example, consist of only two pages: this is a more voluminous document.

It is important to study the past of the project team and who is behind it . This advice is from Maria Stankevich, EXMO Development Director. She also named a few more significant parameters.

  • Determine how interesting and promising the underlying idea is.
  • Check for MVP – minimal working prototype.
  • Check the execution of the roadmap . It is important to understand how the project is progressing, whether deadlines and deadlines are being met.
  • Get to know the project community . It is important to study the general information field around a startup and see how branches are maintained in specialized forums.
  • Determine the market value of the project . That is, to understand whether the market really needs it and whether it will be useful.


Segment and uniqueness

Assess the market segment to which the project belongs . This recommendation was voiced by the leading analyst at 8848 Invest, Viktor Pershikov. He said that now projects related to the field of fintech, logistics and cloud solutions are in demand at the start. This is evidenced by the direction of the flow of venture capital investments in 2020.

“In the fintech sector, it is worth paying attention to companies that provide debit crypto cards, custody services, online wallets, as well as decentralized exchange (DeFi),” Pershikov said.

According to him, it is necessary to invest in projects from sectors that are in demand among venture and institutional investors. This is the foundation for the medium-term growth of the price of tokens, and not just its local surge after listing on exchanges.

The uniqueness of the project and its viability . These parameters of a successful project were named by private trader Alexander Boyarintsev. Among these parameters, I also included the liquidity of tokens . In terms of trading volume, the promising coin should be close to the top 50 cryptocurrencies in terms of capitalization.

Boyarintsev advised buying tokens even before they were added to trading platforms, while the price did not rise. After the listing, it is already difficult to make money by investing in new coins, the trader emphasized.

Stankevich adheres to a different point of view. Of course, you can buy new tokens cheaper before listing on exchanges. But it is better to wait for the project to appear on trustworthy trading platforms. Before adding assets, they conduct a thorough analysis of them, assess possible risks, study the activities of the startup and its financial position.

“There is no doubt that buying a coin at an early stage has its advantages – first of all, the low cost. But we recommend waiting for listing on medium and large exchanges, since such exchanges usually have a rather complicated due diligence process, ”explained Stankevich.

Troshin took an intermediate position. He believes that if a trader is lucky to find a project with great prospects, but the goal is speculative, then it is better to buy tokens during the ICO phase. If we are talking about long-term investments, then it will be more efficient to first wait for the launch of the project, and then purchase coins after their value has decreased.

In mid-September, former product manager at analyst firm Messari Qiao Wang called DeFi tokens "the investment opportunity of the decade." He believes that not taking this chance is like not buying Bitcoin in 2013 or Ethereum in 2015, although there is a lot of junk in the industry. Therefore, it is extremely important to choose projects that develop a real product and have a fundamental basis for growth.

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