First and foremost, I would like to point out that this is not financial advice. I am just a crypto enthusiast who likes to share his opinion based on my personal experience in the field. Anyone interested in investing in crypto must know that it is a risky business. Risk doesn't necessarily mean bad. It just means you should use maximum caution. And just like any investment, high risk is usually correlated to high reward or great loss! 💰 I am just sharing tips that work for me and many others since I have been investing in cryptocurrencies for quite a while. I have lost a lot of money investing in cryptocurrency but I took every loss and turned it into something learned.
I have learned that the crypto space is very risky, but also it's a space with great potential. While nobody can predict how good a crypto asset will be, there are some hints that can help you make a good judgment when evaluating a project.
The criteria below could help you with your decision when you want to invest in any project you find.
Maximum and Total Token Supply
I'm starting with this first because this is one criterion many newbies pay more attention to. Investors are taught that an asset with a low supply will do better than another one with a large supply. It makes sense somehow because a low supply of assets defines its rarity. But all rare things are not necessarily valuable. The value should come from the asset itself but not its supply. For instance, Gold is valuable because it's super rare on Earth, but it's also used as an important component in many electronics or as a universal currency.
You need to look deeper into a project so that you won't be fooled by its supply. If you find out that the fundamentals and other metrics look good, the supply shouldn't matter much. The only thing you have to keep in mind is that it takes more investors to push up the price of large supply tokens.
A project's historical data can tell you more about the project. Historic data I pay close attention to are price at launch, volume, holders, and average price. These data should show a positive sign over time. A project's historical data can help buy in the right time like when there is a dip caused by FUD, or during a bear market.
You can find token historic data on websites like CoinMarket Cap or Coingecko.
The Team Behind the Project
A project that clearly discloses the team that runs it, should be a good sign for investors. The more you know about a project team, the more your confidence level grows for it. I like it when I can learn more about team members and find out their backgrounds. My confidence even grows higher if I find out that they have worked for legitimate companies I know about. Since cryptocurrencies are tech-related jobs, chances are you could find former or current employees from well-known companies like Google, Uber, Amazon...etc. Even if you never heard of a company they previously worked for, you could search it to find out more about it. I also prefer when I can verify the LinkedIn profiles of team members. This even enhances their professionalism.
Please note that since most cryptocurrencies are open-source projects, you could come across projects that have no team to disclose like a traditional company. Instead, they have a community of developers that are involved in the project. A famous example of this is Bitcoin. In this case, a good way is to search for community engagement on Github, Twitter, Discord, forums, and the likes.
A project with a strong engaging community behind sounds more legit. After all, the internet is full of strangers interacting with each other. Ask yourself why so many people from different backgrounds would love a project so much. Usually, people are attracted by projects that they think can improve people's lives. Take Bitcoin for instance, people who love it, including me, like the fact that it is been created to decentralize the financial industry. Bitcoin is not run by any government or centralized entity. Instead, it's run by the people. Anyone can participate in the ecosystem. Bitcoin makes it possible for the unbanked in the developed nations to keep their money safe. It also protects them from losing their fortune in the case where their national currency gets devaluated. This is just some example, and I know you get my point!
The same goes for any other projects that people tend to love. Do your own research about a project to understand it.
It is also important that the project team do constant updates about the evolution of their project. It's important to communicate to your investors, otherwise, something looks fishy. To verify if a project is still alive and engaging, I usually look for it on Twitter, Telegram, Discord, and Reddit. I pay attention to the time interval between their new post. Some projects post every day or week, while others spend months before posting anything. And when they do, it is sometimes about an upcoming release. Common! You wait all that long and not even a working product yet👎. You get the point🙂
Your own gut feeling about the project
You are the captain of your vessel! If you feel like something is a good investment, then go for it. I always say to myself that it is better to try than regret it later. If I try and lose, at least I will be at peace with myself more than knowing that I lost a lifetime opportunity. And keep in mind that the most successful people on earth are those who tried more and more even when they lost. many times. By trying, successful people will eventually win one day! Oh...Also, don't put all your confidence in the so-called Crypto-Influencers. Do your own research and find good projects before they do. Good luck!