How To Do An Analysis On A Cryptocurrency
The cryptocurrency market is very similar to the stock market, we tend to speculate and even sometimes take big risks to find the next 1000x coin, they want to find the secret formula.
But there is no secret formula on succeeding in trading/hodl, people that are saying that they have the best technique usually also want to sell you something, but I am going to try to give you a good basis with 3 tips that I have learned through my investing journey...
1. Market cap divided with the price
This is a very old rule in the stock market, let for ex. say that the market of the stock is worth 13 million and the stock itself is worth 2 dollar
2/13 000 000 = 0.00000153846
0.00000153846 indicates the percentage (%) of what the stock market value the coin right now
To use this skill in the cryptocurrency market, you should do the same thing but instead of the price you should take the circulating supplies divided with the market cap of the coin, and then compare the coin to others and ask yourself "is this coin over or undervalued?"
2. Understand what you are buying
Even if you are "just" daytrading, you have to know what you are buying and these are two simple questions that can help you gain knowledge:
- What makes this coin so unique? What type of value does it offer?
- Who are the person behind the coin? Are they trustwortey?
Bonus tips: Use YouTube/Google to find independent analysis of the coin
3. Never take specified buying advice from someone, DO THIS INSTEAD!
The worst thing that could happen is that you believe in a shitcoin seller, what you need to understand is that a lot of cryptocurrencies out there are scams and people are going try to convince you to buy their token.
It is going to come times when a few cryptocurrencies get a lot of hype, this is usually called pyramid games and if you are buying it then you are going to make a rich fag even richer...
Do this instead:
Find a coin before it gets hype, it can be really hard but you need to be really patient and have a lot of discipline.