Smart Ways To Analyze Crypto Investments Before Placing Them

Crypto Investing can look difficult, the crypto industry doesn’t stop only at a couple of coins like Bitcoin (BTC), Ethereum (ETH), Binance Smart Chain (BNB), and such. There are over 5,000 cryptocurrencies out there but how do you know in which one should you invest? What are the risk factors behind each choice? First of all, you should have an investing strategy before going out there so you would know which crypto would be a good fit for your portfolio.

Before you get started, you should first decide your investment strategy. You can read more about that in my other article: 3 Types of Crypto Investments. Here is a list of key factors that you should consider before investing in a cryptocurrency.

Branding

Have a look at the project and get see how it feels. The activity, design, website, social media platforms. In this world, looks are essential. If the project is not sexy, it will not reach far and won’t get much traction, especially in the early days. If the people behind it are not willing to invest in themselves and take it seriously, show a professional job on a low-level task like designing or having a customer support basic infrastructure, then there are small chances the project will be a success in the long term.

The Team

As mentioned earlier, have a look at the team behind it and try to find out more about them. Make sure that they are verified members of the core team as some scammers might steal images off the internet. Google their history, past projects, social media accounts (especially LinkedIn profiles) and see their past projects and knowledge on their position. This will help you decide if the team behind the crypto can succeed and push the project forward.

Whitepaper

The cryptocurrency whitepaper is a document that explains all the token features and all information is stored. The place with the two most important features, the technology behind it and the purpose of the crypto. There are coins out there that are meme or dog-related coins that have absolutely no real-life value in them and are just speculative financial instruments. I don’t recommend going into this area unless you are willing to gamble the funds. The higher the risk, the higher the return.

Marketing

Any project, as good as it might be doesn’t sell if nobody knows about it. If nobody trusts it, they won’t invest their hard money into it so the cryptocurrency value will not raise as you would wish it would have. Also, bad marketing can backfire in the same way. There are some examples out there of really good marketing and a really dedicated team and PR stunts that shake the digital world. The crypto market is still new with lots of room to grow so overall, there should be the only way to go which is upwards. Also, it is a good thing to keep an eye open to what other people are saying about the project, at the end of the day, they are the ones making or breaking a cryptocurrency.

Community

See their social media channels, especially their Twitter and Telegram accounts to get a real feeling of the people that are backing and actively watching the cryptocurrency. They say that 20% of the clients represent 80% of the business. Also, double-check if those users are indeed real and not bots or airdrop hunters.

Practicability

Does this cryptocurrency have any practical use in the real or digital world? To what extend? Is it scalable? Reliable? What is its competition in the market? How plausible is it for the project to become a reality and to succeed in what it has planned down its roadmap? Is there anything that has happened similar before and you could learn from it? This is a key factor when you should choose a long-term investment. With no practicality, you might just speculate your next trade and not make a practical investment.

Conclusion

When looking at your future investments, you have to take everything into consideration and a good tip would be to also look at the past. Usually, the trends reappear and what had success in the past, will have again in the future with an updated version of it. Usually, any technology starts slow and shy but grows over time.