And so! If I want to make money in the cryptocurrency market with little capital, I have to be smarter than 95% of the participants. To get into the top 5%, it's enough to buy an asset at a price that 95% of 100% didn't buy it at. I will have to sweat a little bit by analyzing projects in detail, studying tokenomics and diving into a form of manipulation that the teams have just conceived in order to fall on their tail and make money with them.
How to analyse and find promising projects?
1. What kind of technology does the project represent?
The first thing to look at is what kind of technology the project represents. There is technology that I am prepared to invest in for five or even ten years. And there is someone else's product, such as BAT (Basic Attention Token). BAT supports Brave Software's blockchain-based digital advertising network for the Brave web browser. The reason I won't invest in such products is because it's not basic technology, it's someone else's product, someone else's token, someone else's marketing, and if the browser doesn't go through (something doesn't work out for them), the token in one browser ecosystem..., that's huge risk.
Important: understand how the blockchain, the ecosystem, what will be the growth trigger not only for the coin but also the ecosystem as a whole. Investing in the technology that will be the foundation, the basis for everything, at an early stage, is the key to financial freedom. Such projects (infrastructure-intensive, capital-intensive) include: Ethereum (which is the basis for products such as Basic Attention Token and thousands of others); Polkadot (exactly the same, it is: an ecosystem, it is a blockchain substrate that allows other companies to develop blockchains for their needs); Cosmos Atom, Aptos and others.
2. Who is the founder of the project?
The second thing to look at is who the founder of the project is and whether he or she has the experience to really develop the technology that will become one of the largest ecosystems in the cryptocurrency segment. There are not many people like that at the moment.
If the founder of a project is someone like Gavin Wood - the one who created the Solidity programming language and was the first CTO of Ethereum - and you find out that he is creating his own project, that is a very strong signal to take a closer look at this project. Someone like Gavin Wood, he's not going to think about creating any scam, yes, he might make a mistake and his startup might be unsuccessful. But, founders of this calibre deserve our attention.
3. Will the project survive the arrival of the sec regulator?
The third thing to pay attention to is whether or not the project will survive the arrival of SEC regulator. When you buy a coin you must make sure it is not a security. Coins that are not common stock, are those that were mined and didn't have any PUBLIC ROUND, much less BURN SUPPLY. Otherwise there will be huge problems in the project: fines, security clearance, delisting from exchanges, and even arrests of the creators of this coin.
An example of a coin which is in extremely high risk zone, is well-known BNB. BNB is a coin which meets all the criteria of a security: held public rounds, including American citizens; had and are directly affecting the performance and profitability of the BNB token, by means of flaring. Playing with circulating volume and price manipulation, oh how the SEC regulator will not like it. That's why it's important to invest in projects that won't fall under regulation.
Example: the DOT coin (of the Polkadot project). Gavin Wood is someone who has been working with the SEC since 2019. And now, on 4 November, the Web3 Foundation Team's general counsel Daniel Schönberger said that the Polkadot native token (DOT) has "transformed" into "software" and not a security.
Case in point: the CHIA coin (Chia Network project). Bram Cohen is generally a man who thinks 20 years ahead. In 2021, Chia Network raised $61 million in investments from leading investors such as Richmond Global Ventures and Andreessen Horowitz, but in compliance with SEC requirements. What does this mean? In order for the regulator not to have any questions at all from the legal or any side (how the contract with funds etc.), Chia Network acted very smart, they took money from investors, but did not give them the tokens. Investors will not receive the tokens until there is a concrete decision from the SEC regulator. Chia Network as well as Polkadot are specifically building the product, and the funds that invested in Chia Network understand that this project will not only survive the SEC regulator... Otherwise, they wouldn't have risked their money.
4. Number of developers
I have noticed that there are projects that, at first glance, look very promising. But, after a thorough check, it turned out that there are a few programmers working there, and the capitalisation of the project was $5 billion. Such projects are just another bubble, and after they blow up, their coins just lie at the bottom, unneeded by anyone.
It is important to understand: That a few developers cannot create something brilliant, without a team and, of course, funds. There are a lot of people who want to develop and play with tokenomics, but only a few can create something really brilliant.
5. Who invested in the project?
It is very important that there are large funds in the project. Why do you need big funds? The thing is, no matter how cool the project is or what kind of technology it is, if there are no big funds in it, there is no manipulation of the token. For an asset to grow, the coins must not be in random hands, they must be redeemed by funds, thereby accumulating the bulk of the issue in their wallets, in order to manipulate the price in the future. Chaotically distributed coins are sold at every price point, after which, the coin rolls to the bottom.
But Funds, it's not just money, it's also resources: listings on top exchanges; major partnerships; media glimpses, example 2022. All cryptocurrencies without exception have fallen by almost -95%, from their peaks. Most coins will remain convulsing at -95% because no one knows about them. But coins with big foundations in them are on everyone's lips, we just hear: ...partnered with so-and-so, project ... raised $300K to develop so-and-so, so-and-so, etc.
Important: Funds are not only money, but also resources. Therefore, it is important to pay attention to which foundations are willing to risk their funds in a given project.
6. Who is following the project?
If there are reputable people (Vitalik Buterin, Ilion Musk, Gavin Wood, etc.) or their partners among those who follow the project, it already tells us that such guys will not sign up for some fraudulent scam like AMAZY.
7. Project Tokenomics
And the final step, which will help you understand whether it is worth to enter into this or that project.
The first thing you should pay attention to is how coins get into circulating volume (coin allocation) and what is the price of coins?
1.1 How many coins does the team and the funds own (if a team has more than 10% - this is a trigger to check it more carefully);
1.2 When will the coins of funds and teams be in circulation (available for sale)
1.3 At what price did the funds buy (if the funds have X10, X20, X50 when the coins come out, they will manipulate the token hard);
⚠️ Be careful when people like Peter Brandt (trader), at the $200 mark for Solana, says: look how Solana trades beautifully paired with Ethereum, "I think Solana is stronger than Ethereum and will grow further".
But, for some reason, a smart, mature, successful and respected trader with a huge audience, doesn't say that the funds bought Solana at $0.04 and at $0.20 per coin, and today they sell it at $200, that they have X5000 today, that for every million dollars invested by the funds, they can raise 5 billions, if they find such liquidity. Something tells me that someone like Peter Brandt is not mentioning this on purpose, not because I'm smarter than him.
Important: Study tokenomics, it's the key to everything. Learn to understand manipulators and there will be a holiday on your street too.
There will soon be a second part where I will explain in detail how to find brand new projects like Aptos.
