Being a crypto investor isn’t easy, especially in such a new and volatile market. However, few have the skills to diversify their portfolio adequately, depending on their risk level and the market’s current dynamic. Indeed, reallocating assets can be tricky, especially for beginners, but it’s necessary to get enough exposure to the market to build some confidence and identify which projects are worth investing in.
A project’s utility is the first aspect to consider when considering a cryptocurrency. Bitcoin is known for being a store of value assets, while Ethereum has smart contracts for creating decentralized applications. Other altcoins, like Worldcoin, distribute ownership of the coin globally, and the ecosystem offers anonymous proof of humans for the internet concept.
Therefore, investors can look into the Worldcoin price before the project becomes a competitor in the market since it’s now emerging among altcoins.
But how do you analyze a project that was just published? And what are the signs of a less profitable crypto? Let’s find out.
Where To Look At New Cryptocurrencies
You must thoroughly research the market and offerings if you’re looking for new and exciting crypto projects. You can monitor the market’s options on:
- Cryptocurrency exchanges;
- Social media;
- NFT marketplaces;
- Decentralized finance platforms:
- Initial Coin Offerings (ICOs);
- Exchange-traded funds;
Exchanges are usually the most reliable places to buy cryptocurrency, so beginners might want to start here. However, social media can offer a broader image of the growing crypto market. In addition, several tools are useful in identifying key features of a project. For instance, software can tell you if a crypto has been flagged as a scam but can also showcase whether the contract behind the project is verified and the source is genuine.
Take The Time To Read The Whitepaper
A cryptocurrency’s whitepaper is the most important document regarding the project as it presents the creators’ goals for the cryptocurrency. By reading it, you can learn more about the coin’s practical application and technical details, such as consensus mechanisms.
Most white paper documents include jargon and specific terms, so take the time to look into their meaning and understand how they’re used in that context. For example, cryptocurrency and tokens are used interchangeably, but their meaning differs. A crypto coin is the native asset of the blockchain, while the token represents the asset.
Look Into The Use Case
While cryptocurrency projects started by having a use case, the market broadened in the past years, allowing developers to create something fun and not necessarily useful. For example, meme coins don’t really have a specific target on the market, but the community pushes for their values as they’re fans of memes. Dogecoin is the perfect example of how a source of entertainment can become a digital asset, and its use case has also developed since the beginning. It is now being used as a means of exchange even by businesses.
Besides the initial use case, many crypto projects innovate and find ways to solve prominent issues. For example, Ethereum started operating with the proof-of-work consensus mechanism, but due to network congestion and increasing gas fees, it switched to proof-of-stake, making it efficient and sustainable.
Look Beyond The Project And White Paper
Another factor in determining the cryptocurrency’s project is to research the team behind it. Those who created the coin should have some experience and qualifications in the industry, so their work is based on palpable evidence. While most projects have a website where they mention the team, it’s best to look into these people thoroughly to ensure they’re not scammers.
You could also look into historical crypto scams to see how these occurrences can happen. For example, OneCoin is known as one of the biggest scams in history, where Dr. Ruja Ignatova and her husband left the project’s investors without $4 billion. The project was created using SQL programming language, and the coin wasn’t registered on the blockchain. Still, OneCoin was supported by three million members.
Check For Red Flags
If you didn’t seem to find anything suspicious until now, there are some red flags you may want to consider before investing in a project. For example, suppose the project’s social media is flooded with exaggerated partnerships. In that case, it might signify that the ads are either fake or trying to push for adoption due to lack of value.
At the same time, if you notice the coin’s community is absent or active, it would be best to avoid investing in it. Communities are the most important for crypto because they drive value and push for innovation, and without them, the coin is either useless or a scam.
Finally, watch out for insistence. Scammers might trick people into feeling FOMO (fear of missing out) by urging them to buy despite the coin’s lack of future. A project’s popularity should be pushed by common efforts, not by a single team whose purpose is to run away with the investments.
How Do You Know If A Project Is Valuable For The Long Term?
It can be difficult to determine if a crypto project can sustain portfolio value longer than a short-term investment. That’s because the market shifts based on real-world events, and some can increase a coin’s value, just like they did during the last presidential elections in the US, where the impact on the market was massive following Trump’s election win.
That‘s why it’s best to diversify your portfolio and be ready for any upcoming challenge by being up-to-date with the latest crypto news. Being a long-term investor is easier when you know the market well and are aware of how small occurrences can influence it.
Are You Interested In Any New Cryptocurrency Project?
Portfolio diversification implies allocating resources to various cryptocurrencies across different industries and sectors. Many of these projects are emerging altcoins whose fame has yet to burst the bubble of the market, but their potential for revenue can be considerable. However, not all projects are the same, which is why you should research them thoroughly to ensure they’re not scams.
