How to Measure the Potential of a New Crypto

 

How to Measure the Potential of a New Crypto
We are often affected by FOMO (Fear Of Missing Out), where investors buy new crypto when the price trend is up, because we are afraid of missing out on profit opportunities, but unfortunately a few days later the price of the new crypto drops drastically, so only early investors get big profit while new investors only lose money. Many new types of crypto have emerged with various attractive offers, although each new coin/token can create profit opportunities, as investors can buy crypto at a low initial bid price. then target the selling price to take profit when the popularity and price of the crypto is almost at its peak. Of course, this way of investing is very risky, because there is no guarantee that every new crypto will become popular and become an investment and the price will tend to rise. Many cryptos fail to compete and even die before they thrive. Therefore, if you are interested in buying new crypto either for your main investment or just as a crypto portfolio diversification, you should pay attention to 7 Tips to identify potential new crypto opportunities:

1. Developer History
Visit the white paper site, check the Developers of the new crypto project, (Can also use Google Search). There are a few questions you can be sure of. For example, what other projects have the developers done in the past? Are they experienced in technology or in cryptocurrencies? If the founding team of a new crypto project has little experience, you should avoid the crypto. On the other hand, if the team has a good history and appears to have close relationships with other major players in the crypto industry, that is a good sign for the future of the cryptocurrency you are eyeing. In addition to looking at the experience of the development team, you also need to see how they interact in the crypto community. If they are active on social media and responsive in answering questions from other crypto users, then this can be a plus for the new crypto.

2. Developer Commitment
Did the development team try to maximize its productivity and maintain strong communication? Or do they just not appear to be active in their GitHub repository? You need to make sure of these two things, because an active developer is a sign that the team is always committed to improving the performance of their product, and will fix bugs as soon as they arise. Check the code repository to see how many issues have cropped up, how many issues have been closed, and how quickly the work got done.

3. Community Strength
If the development team looks good, it's time to start reviewing other users' opinions. Of course, you are entitled to your own perspective. However, monitoring other people's perspectives can shed light on issues or highlight aspects you haven't thought about or considered. Cryptocurrency forums like Bitcointalk, Cryptorum, Reddit and CryptoCompare etc are examples of ideal places/forums to explore and ask questions. In the forums, you will be able to see what community members are saying about the new coin you are reviewing. In fact, public support is important, as it can be an indication of the future growth of crypto.

4. Funds and How the New Crypto Is Distributed
We need to know the funds they use as capital for the creation of new crypto, the bigger the funds, the more likely the new crypto will be more stable in the future. Apart from that, investors also need to evaluate how the new crypto is distributed. If the coin distributes less than 50 percent of the circulating supply to the general public, it can become a Flag and will only lead to a Pump and Dump scheme.

5. Trading Volume
Trading volume is a good sign of liquidity in the market. In general, the higher the trading volume, the easier it will be for you to exit a buy transaction and liquidate the profits from the previous position. Thus, high Volume indicates stability and low risk. If the trading volume is too low, you may not be able to sell whenever you want, making it difficult to realize your profits or stop your losses. Apart from that, you can also use trading volume as a tool to analyze the strength of price movements. Weaker trading volume when prices are rising usually indicates an imminent decline.

6. Market Capitalization
Market capitalization is also an important indicator to measure the risk inherent in new cryptocurrencies. As with stocks, a larger total market cap is generally an indication of more reliability and stability for the crypto coin. In addition, cryptocurrencies with a high market cap are not susceptible to market manipulation.

7. Traded on Exchanges
The last fact to check is how many major exchanges trade the cryptocurrencies. Crypto exchanges usually have their own filter in choosing the assets they trade, so you can use them to gauge the potential of the crypto you are interested in. However, the exchange will not list assets that are less well-known and uninterested by its clients. If your chosen coin is listed on major crypto exchanges, and there is significant support for the cryptocurrency to stay there, then it can be concluded that the cryptocurrency has considerable potential.


Ask Yourself
Besides the review and analysis on the new crypto above you also need to ask yourself questions before buying/investing in the new crypto, so you will get the answer for yourself. Let's get started.

1. Measure Your Risk Tolerance?
You need to measure your risk tolerance, because crypto volatility is very high, even higher than forex, stocks and bonds. Are you ready to lose your money? If your risk tolerance is low, you should choose a safer type of investment. but if your tolerance is high you will get a chance to get bigger profit (but use cold money to invest in crypto).

2. How Do You Invest in Crypto?
Before investing you should determine how you invest in cryptocurrencies, whether mining crypto, or trading with a forex broker or trading directly on a crypto exchange.

3. Types of Investors
Determine whether you are a short-term investor (trading) or a long-term investor. Trading will be profitable quickly but risk is high, long term investment is safer and easier, you just need to buy new crypto and keep it for at least a year.