There are several rules to consider. Investors in any market always analyze and look at a number of factors. The main ones are:
News background. A person does not have to leaf through news feeds and study a lot of material every day. It is important to filter out the topics, and important news are listings on exchanges, partnerships with large funds, technical changes in the project and attracting new investments.
The benefit of the project. The asset should have a future benefit and impact on certain areas already today. When considering platforms for DApps, the quality can be judged by the technical characteristics – network speed, efficiency and other pluses. For gaming assets or DeFi, the community, growth and development of the team will be important.
Reputation, which is something to watch out for in any project. Scandals worsen the appeal to long-term contributors. Any malfunctions, hacker attacks, deception of customers – the type of fraud and cryptocurrency such a project is best avoided.
Age of the project. In situations where the project is 1-2 days old and the creators talk about million-dollar profits, a large percentage of growth, then you need to think about what the catch is. There are mechanisms to artificially increase the price of the asset. Manipulation of this type is a common bubble to take money from inexperienced investors. It is very easy to increase the value of a young asset with a small capitalization, any good news can push up the value. For short-term trades, it may be a good proposition, but not for long-term holding of coins.
Liquidity. Often bad projects don’t have a liquidity pool – you can buy the asset, but you can’t sell it.
Community growth and behavior. If there are followers behind the project who believe in the development, you can talk about the future of the asset. Without a community, even Bitcoin was just plain code.
Risk appetite. Any investment is a risk, but with the possibility of a thousand percent return within a year. In 2021-2022 there were a lot of such stories, but investing in TOP cryptocurrencies will not let you lose all funds in the market, but with young projects not everything is clear.
When entering the cryptocurrency market, it is necessary to understand how much money is allocated for investment, how much will be put at risk. Forming a portfolio, it is important to have the right asset allocation.
