How do I recognize a good cryptocurrency?

If you plan to buy a yet unknown cryptocurrency with the goal of finding a growth diamond that will go over the top dozens of times or more, it is necessary to do a full technical and fundamental analysis. This will take a lot of time. However, you can still do something about the time you spend per coin.

That way you can see if a team includes well-known people from the crypto world. If not, the project's chances of success are a lot lower, unless you can find weighty arguments why an unknown coin can still do well. If a project fulfills a strong need or function or has a very active community that is in an established segment, such as Toncoin with Telegram, then further research is worth your time.

Fundamental analysis of a cryptocurrency

In fundamental analysis, you look at what foundations a project is built on. Do they have a foundation of concrete or is it quicksand? Are these foundations such that they rival other projects? If so, you might have found a gem that will eventually break through.

High profit margin

When looking for the next hit you will see a cryptocurrency need to find ones that are relatively low. From page 3 of CoinGecko and even higher page numbers, you can sometimes find coins with high potential that few investors currently know about. Virtually every coin has been low at one time or another, so it's certainly not impossible. It will take you a lot of time and the results are always uncertain, there is certainly a chance that you will lose your investment, but it can also go very well.

Examining the team

For example, the first thing you're going to look at is which team created the project. If it consists of crypto experts from the crypto world who, for example, were part of the founding team of Ethereum (such as Charles Hoskinson of Cardano or Gavin Wood of Polkadot) or other important cryptocurrencies, then this is usually a sign that they want to come up with a good solution for something that does not currently exist. Why else would they leave their home turf?

What also helps is if the team includes big names from the big companies of the world. If someone has worked as CTO at Google or marketing manager at Nvidia then this can give a strong boost to a team. This experience and their network can make all the difference in rising to the top. If the team is strong then the project has a much better chance. Google key team members if it is not clear where they came from and you are interested in the project.

Who are the investors?

When a new project is launched, there are often investment rounds that the general public is not yet allowed to participate in. When you see that seasoned investment clubs like Andreessen Horowitz or Pantera Capital have invested in the presale at the ICO or some other type of investment round, that's usually a good sign. These people know exactly what a project entails and really aren't going to invest in castles in the air or scams .

Use cases of a new cryptocurrency

If there is great need for the problem that a cryptocurrency solves, then popularity can go quickly. Have they thought well enough about the design of their coin? Is it an understandable technique? Does the world even need this technology? Are there problems waiting around the corner because it's all way too technical? Are many people and companies going to use their technology?

Don't make me laugh

If golden mountains are promised, it is usually a scam, like a pyramid scheme. Will you get 1% interest a day? Are they going to beat Bitcoin? Is it going to be the best stablecoin ? Talk does not fill holes, empty promises are often based on quicksand.

Competition

A project's competition can make or break the cryptocurrency. If your competitor's name is Ethereum and you're working with smart contracts it is virtually impossible to beat them. If the competitor is much lower in the list of cryptocurrencies, it is much easier to get close to them.

If it is a completely new technique, the chances of a breakthrough are much easier because you have already established that the coin fills a need and there is a good team in place. In fact, you go down the list 1 by 1 and get more and more enthusiastic as everything adds up. With the best projects, you often have to be quick, otherwise it will be in the top 100 in no time and you will be too late.

Website design

The website can also send an important message. If the website is beautifully designed, it says something about the dedication of a team that knows it is their showcase. If the website is full of spelling errors, images that don't load, untruths or other marring, this is often a bad sign. Would a really good team find such a thing acceptable?

The roadmap

The roadmap can give a good indication of how productive the team itself thinks it is going to be. You can also see here if they plan far ahead and if the targets are realistic. If they have met almost all of their targets and the future map is well filled, then they are going strong. Strong coins also have important targets and not exclusively minor updates. You can also see here if many additional coins are added or released.

Popularity

The popularity of a coin also says a lot. If there are many addresses actively working with a coin it means that the coin is being used by many people for something. It must then have a good use case. If there are few addresses that have the coin at all then there is a total lack of attention.

If a cryptocurrency is widely discussed on GitHub and other tech channels or in social media, its popularity can grow quickly. If no one is talking about it, think again before you buy it. Why shouldn't anyone talk about this gem that you've come so far with in your analysis?

Marketing also plays a role in this regard. Are the creators determined to make it, or do they seem fine even if they don't? If a project has no advertising and also no major players in their ecosystem, this thing may well never break through.

Tokenomics

Tokenomics are also a thing. If there are still a lot of coins to come you better stay away from this project. Perhaps at some point this cryptocurrency will be on page 1 and the coin will be worth even less than what you bought it for. This is called dilution, where the number of coins rises so much that the market cap although growing, the price of the coin is falling.

The price per coin can also be a stumbling block. If this price is already very high because there are quite few of the coin entering the market, investors may drop out because they can't buy enough of it. This is a psychological barrier that can slow the advance of a coin.

The white paper: the final frontier

If you believe you have found the latest pot of gold you can still find the whitepaper going to dig through. Since these are technical pieces I would do this last. Reading the white paper is mostly about the impression you get of a cryptocurrency. Do you get the idea that they have thought about every aspect of the cryptocurrency or does it seem more like a quickly cobbled together piece? If you don't understand everything in a white paper that's fine, the main thing is that every important aspect of a cryptocurrency is well thought out.

Fundamental analysis stock market

The master of fundamental analysis of stocks is Warren Buffett. It wouldn't hurt to read one or more of his books or watch online to see how he picks out the best unknown stocks using fundamental analysis.

He will also speak in those books about the technical analysis , but finding unknown companies that can break through is his specialty. The rise in the value of his company's shares Berkshire Hathaway speaks for itself and is not based on magic!

This way of looking at companies can also be applied in looking at projects from the crypto world. After all, the stock market and the crypto market have a lot of similarities in terms of fundamentals.

Technical analysis of an unknown cryptocurrency

The technical analysis of a coin can help you learn the volatility of the coin and buy the coin as low as possible so that the chances of profit are much higher. You can use indicators and candlesticks to make the moment of purchase as precise as possible.

Setting course

What is a low rate and what is a high? What tops have there been. Is the new coin on its way up or is it going very much sideways? The price is the most decisive factor in technical analysis.

Suppose the cryptocurrency has been around for 3 months now and it has a All Time High of 2 euros and an All Time Low of 50 cents. You could then decide to buy the coin when it is around 50 cents again with a small margin. If you could buy it for around 60 cents that would be fine.

Seeing that the coin has taken off like a rocket without a break, this may not be a good plan. It may well be that a lot of people do like this coin and there are more buyers than sellers. That would mean that you would never get the coin at a lower price than now. That's why you also need to do technical analysis and adjust your strategy accordingly.

The complete plan in crypto investing

If you have decided to invest, the only consideration when buying is at what price. Eventually you will want to sell it at the time it does what you bought it for. By that time, you should be able to sell it at a sufficient profit.

What factors often contribute to the success of new coins?

The team. Sometimes unknown teams will make it, but usually established names with strong networks have the best chance of putting successful projects on a roll.
The professional investors. If you see that big names have invested in this project at the ICO or even earlier, this is a very good sign and a reason to investigate further.
Use cases. The more often you need a coin, the more it can become worth. Ethereum did prove that as a multi-purpose coin.
Revolutionary technology. If the project has come up with something that is just needed in the world of blockchain and cryptocurrency, this is a huge plus.
Competition. If the competition is too strong and already established, it is virtually impossible to get in between. Only the absolute best achieve this sporadically.
Tokenomics. The better thought out the economics of a token are, the more confident investors will be.
Active community. If many people talk about the coin and there are many active addresses then the coin has a chance to break through.
Good and clear website with a roadmap full of realistic goals that are also met. This shows that the team wants to succeed and is working hard at it.
Marketing. If the project advertises in any way it is much more likely to succeed.
The whitepaper. If everything is right, it's almost inevitable that the white paper should look good, too. Yet this can still throw off the windows. A technically strong whitepaper is the foundation of a good project.

What strategy do you have?

Everyone has their own preferences. Finding the best new coins is a lot of work. Perhaps you yourself also have a niche market that you happen to know a lot about because you work in it or it is one of your hobbies. If you specialize in a particular category, you are also more likely to succeed.

Research your own niches first

For example, a gamer can start a survey of all gaming coins and networks and pick out the best ones. Then if there is one among them that is good you can work down this list to see if the project really has a chance of succeeding, even though it is still low. This doesn't have to take months or years and it can be fun too. Perhaps you can find a play to earn game that you will actually play.

Limit the number of coins you want to research

With a list of thousands of crypto currencies, you obviously can't start researching coins at random, even if you had eternal life. You'll just see that by the time you're done, another few thousand have been added! A nice first step would be, for example, to check the team first and drop any coin without a strong team. Then you check for known investors. That probably saves around 99% of the coins. At least that shoots up!

How much risk are you willing to take when investing in crypto?

Cryptocurrency with a low market cap can fall very quickly because it has much less invested in it. If you want Bitcoin to fall solidly, for example, you need hundreds of billions of dollars to do so. If you want to drop other crypto with a market cap of 5 million, then a dump of a million is often enough to cause the coin to collapse.

Observe professional investors

Traders with more wealth can also gamble more firmly. There are professional investors, such as Andreessen Horowitz, who invest in startups with venture capital and regularly make good money doing so. However, they invest before mere mortals ever hear of a project. They usually know better which crypto could become worthwhile.

This is another way to get coins with good odds. Who invested in the startup in the ICO, either as angel investors or as participants in the private sale? If you see a few familiar names listed then these companies are interested and so it almost has to have a strong foundation. Professionals understand the game a lot better than almost anyone else. Take advantage of that in your search for the best crypto currencies.

Crypto portfolio management and your own household

A good portfolio management can already help a lot with your decisions. If you keep a division of 50/40/10, where 50% are top 10 coins, 40% top 100 coins and 10% play money, you can buy some growth diamonds for 10%. If you have a hit you can restart the game, but then you also have a lot more money available.

It also depends a bit on your situation. A student investing some money in crypto has a lot more freedom than a family with 4 children and a house that needs to be paid off. In any situation, you will have to make good arrangements in any case, whether with yourself or with members of your household.

Availability of cryptocurrency

If a coin is for sale on the largest platforms this can be a plus, but usually this is a disadvantage. As it often goes with crypto, they don't become worth much until they are listed on a major exchange and you are basically too late.

If all the lights are green then it's not a bad idea to look at other facets. If no one is talking about the coin on major channels like GitHub, Reddit or Telegram then it's probably not a great choice. If it is and the coin is not yet for sale on major exchanges this could be your golden opportunity.

Buy only cryptocurrencies that have not been around long

In general, though, you can say that the newer crypto coins have more potential, because coins that have been on the market for years and haven't broken through yet probably never will, unless they suddenly get the hang of that project and read this blog!

A new coin with a good team and with the best investors behind it that is not yet for sale on major exchanges will have to earn your preference.

Which unknown cryptocurrency shouldn't you buy?

We've talked about it briefly, but there are all sorts of scenarios that are undesirable:

Coins touted by influencers you should never buy. After all, you are buying coins because you have done your own research.
Many merchants are quite willing to provide a memecoin buy because they can go up so fast. That's true, but most also disappear unseen into the trash. You want to enjoy that 10% of your stack too. It is true that there are Pepe millionaires and that there are traders who have become rich with Shiba Inu, but there are many more people who have lost substantially with both these and other coins of questionable quality.
Be very careful with coins that can have a rug pull . Usually there are signs, but you can just fall for it and then you are left with coins that are worth nothing. Projects with an anonymous team have a tendency to do this.
Also, the pump and dump trick occurs regularly in the lower regions. Do not join pump and dump groups and invest only in well-researched coins that can break through quickly.
If a project promises golden mountains, don't believe any of it. A ponzi scheme is easy to spot by the far too high interest rates. If they want to beat Ethereum, wish them good luck and check out other crypto currencies.
If no one on the blockchain technology is waiting the buyers won't line up either. Use common sense.
Pay close attention to how many coins are on the market versus how many more are coming in, for example, as tokens are released from the team and investors. You don't want to be surprised by a massive dump and see your coins suddenly drop significantly. If there are too few coins it can result in an unusable coin, if there are too many then inflation can occur.
Risk vs reward. If the coin already has too high a market cap you have to pay too much for a reasonably low return. A project still has to be able to go x100 to call it a growth coin. Usually coins with too high a market cap are also already listed on the well-known exchanges.
The coin may be unknown, but not unloved. If virtually no one has the coin and even developers don't talk about the thing, then leave it alone. It's probably a chicken that cackles loudly, but doesn't lay golden eggs.
Only buy unknown coins if you yourself have become enthusiastic about the many good facets of a project. If you are, others may become so too, especially if you have checked the list given earlier in the article and the project scores on all points.

Conclusion

Finding the next growth diamond is not easy, but if you manage to find one and invest a modest amount in it you can also obtain high returns.

If you manage to do this often enough, you can even become a professional and make investing your profession. The most important thing, however, is the pleasure you will have finding one.

Good luck with finding the next good and unknown cryptocurrency that makes it to the top!

"The best new jewels in crypto not only rise to the top but stay there."

Unknown author

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