Without wasting much of your time, let me get in detail so that i make this article short and precise. Lets first see what is valuation a then we check the difference and see why its done.
Whats Crypto Asset valuation?
Valuation is the setting up of value on an asset so as to reveal its true public value. It is Overvalued when it is being sold at a higher price and undervalued when it is sold at a much lower price less than the asset value. There are higher chances that a crypto asset can be overvalued, lets se why.
Why Crypto assets are overvalued?
Normally this is done when the company behind the project i trying to raise some funds.When the Initial Coin Offering is being launched the Assets will have a higher prices so that they can raise as much money as they can.
What are the Risks of Overvaluation
The price of a crypto asset is driven by supply and demand. If the demand is high then supply is low, automatically price will go up and you can benefit. If a token asset is launched and and is being over valued, when it hits the market the price will fall drastically. That is the disadvantage of buying tokens in the early stage and those tokens being sold for higher price, e.g check HEIDI you can see whats happened and it feel hard.
The Market is the one which will determine the price and do not rely on those price projections from the admins behind the project. Lets supply and demand set the price then you decide.
When buying token you have to chose token which have a low reasonable price so that you maximize on it and you do not take the risk of buying tokens which do not have an future. Instead buy coins which has low value, e.g when Binance was launched it was worth $0.11 but look where it is now. That is the power of buying cheap tokens and change them later.
