As an investor, it is important to know what you are putting your money in. some people are not keen to know the details and the specifics of what they invest in and end up losing their money. This is an avoidable mistake when investing in assets, including cryptocurrency. There is a trend that people are following what their social media personalities do and listen what other investors and people are doing. This has led to a generation of investors that know nothing about cryptocurrency but consider themselves crypto gurus/whisperers.
One thinks they are destined to profit from whatever coin they invest in. The current situation in the market has reversed this trend and shown that it is important to study every cryptocurrency before investing. This article presents things that people should consider taking a look at each cryptocurrency before they make a decision.
Factors to consider before investing in a crypto token
The Coin’s Website
Many people don’t know this, but all cryptocurrency tokens have websites accessible to anyone with an internet connection. This is a common practice among all legitimate cryptocurrency organisations to ensure they provide information about the project to the public. The first red flag when investing in cryptocurrency is if the coin you want to invest in does not have a website. This shows that the coin is likely a scam and a money pit for investors. Secondly, the quality of the website of a coin is another consideration. The website should have a clean look. This is the first thing investors see when they research the coin.
The developers of authentic coins have to invest their time and money to create a well-thought-out website. The website should be up to date and with correct spelling. Thirdly, look for the project’s white paper. It is the document provided by cryptocurrency developers with detailed information about the coin. This is one of the most important things to look for and evaluate before investing in the coin.
Many specialists and developers have referred to this document as the backbone of any cryptocurrency token in the market. It shows you that if the website does not provide information about the coin’s white paper, keep off and find another cryptocurrency coin to invest in. The White Paper provides details such as:
- The main reason or the goal behind the development of cryptocurrency.
- The company’s strategy for ensuring the coin’s success in the market.
- How will the coin be or is being distributed to the investors
- The coins supply limit
- Information about the minting and burning of the coins
In short, the whitepaper guides the coin’s activities and offers insights into its potential growth.
The coin’s social media channels
Another category that an investor should consider and research are the coin’s social media platforms. The information from their social media might give you insights into the success rate of the coin. Some things you should look for on social media platforms include; The first is that doing this research may help understand the crypto community.
This will help you to see who has invested in the coin and learn more about the developers. You will also see the reaction the coin is sparking in society. The coin’s number of followers may help you see if the coin has a huge following. This is a key indicator of the coin’s success or growth. Another lesson an investor can learn from the social media platform is to learn more about the moderators. Moderators are the people tasked with social media management.
They help people navigate the coin’s services and inform them about new and upcoming events and features. You, as an investor, should study to see If the moderators are active. Some questions you should try to answer are; “are the moderators answering people’s questions?” “What is their participation rate?” “Are they promoting the coin and all it does on social media?” When you answer these questions, you will have a clear answer and more insights into the project. Investors should also investigate the mood in the community. Are they happy, or are they complaining?
Positive talk on social media means that the services offered are good investment opportunities. It also means that the coin’s demand is increasing as more people learn about it and see the potential others are talking about. But if people complain, this is a red flag that should not be missed. Avoid investing in a coin where the investors are not happy.
The coin’s market metrics
If you are an investor who is skilled and knows how to analyse cryptocurrency values, you should consider researching the coin’s market metrics. This information helps you study how the coin is performing in the market. The best source of this information is CoinMarketCap. There are three main categories that you as an investor should know and understand before making your decision:
Market Capitalisation
This is the value of the entire cryptocurrency project. It is calculated by multiplying the price of a single coin by the number of coins available in the market. It is wise to invest in projects valued at over $1 billion.
Trading Volume
The trading value shows how many coins have been traded or changed ownership in the set period. It also shows the value of the traded coins. High value is good since it shows a high number of investors and a huge market for the coin, thus assuring good returns.
Supply Metrics
This includes identifying the total supply and the maximum supply that the coin will have. It also includes the number of coins in circulation. This information can help you identify the coin’s scarcity and thus see its growth potential.
