7 Effective Steps To Buy A Good Cryptocurrency Asset

7 Effective Steps To Buy A Good Cryptocurrency Asset

Cryptocurrency is rapidly worming its way into the heart of the global economy. In addition, with the rapid rate of crypto adoption worldwide, it is arguably the new era of money, and investing in it now would be a smart choice. However, how do you evaluate which cryptocurrency is worth your investment?

Today, there are more than 19,000 crypto assets, most of which have a futile future. To choose a prospective token with a promising future, you must carefully evaluate it. In this guide, we will show you seven easy steps to evaluate a viable crypto asset you can invest in.

1. Check the project’s official website

The first thing to check about a prospective token you want to invest in is its website. Below are key things to look for on its website:

  • It must be up-to-date and easy to navigate
  • Neat and spelling error-free
  • Displays project’s team members and partnerships
  • States the project’s goal
  • Has the project’s white paper 

2. Read the project’s White Paper

A white paper is the backbone of a crypto project’s proposal. It outlines the aims, objectives, and strategies of the utility cases of a particular coin. In other words, a white paper is the roadmap of a crypto token. Hence, making one of the critical factors to evaluate a crypto before investing your money.

Also, the tokenomics, as well as details on token distribution, minting, and burning, are embedded in the white paper. However, a white can be technical such that you don’t understand everything stated. Do not worry about that. The vital thing is to know who is behind the project,  what mechanism is in place, whether the token has any utility cases, etc. Run from any cryptocurrency that does not have a white paper.

3. Examine Its social media channels

Your next step to evaluate a good crypto token to invest in is checking its presence on social media platforms, including Twitter, Instagram, Discord, or Reddit. Any reliable crypto project must be duly represented on at least three of the platforms stated above.

Your task here is to check the number of their followers and how much interaction their post generates. Examine if their community managers are active and responding to comments and questions. It’s a bad sign if commenters’ inquiries are being ignored.

Also, check for reviews on the token across different platforms. If people’s reactions are positive, then the coin has good potential to generate traction in the future, and hence, it can make a good investment. On the other hand, if people are commenting negative talks about it, it is a sign that you have to run from the token.

4. Scrutinize the project team and alliances

Most times, team members are crucial to the success of a crypto project. Research shows that many coins with good reputations have team members who had initially helped launch successful coins. Having trusted and famous crypto experts in a crypto project team boosts people’s trust in the coin.

Hence, you have to examine the project’s executive members, their reputation, and their history in crypto launching. Also, look for the list of external partnerships the firm has. If you can’t find the name of 5he executive on the token’s whitepaper or website, the coin is probably a scam. Also, having an expert with a track record in a project’s team can boost the success rate of the token.

5. Assess the crypto’s market metrics

Crypto aggregators such as Coinbase usually provide three basic metrics investors must consider before investing in a particular token. These metrics are listed below:

Market capitalization

The crypto market cap is calculated by multiplying its price by the total quantity of coins circulating the market. Experts suggested that it is ideal to invest in crypto with a high market cap of over $1 billion. However, the suggestion is not fail-proved, but it is generally safe to invest in coins falling in the top 100 in terms of market caps.

Trading volume

The trading volume metric showed how much of the coin has been traded at a particular period. High volume indicates more traders, liquidity, and price stability, and vice versa. It is ideal to invest in cryptos with high trading volume.

Supply metrics

The supply metric helps to understand the potential scarcity of crypto coins, which can impact its price action to increase or decrease. Maximum supply shows the total quantity of a currency that can be minted, while circulating supply shows how much of the coin is in the market.

6. Analysis of the price history

Taking note of the price history is very crucial in evaluating the cryptocurrency you intend to buy. The highs and lows of a coin makes over time and how gradual it makes it help you to understand the possible market trends of the coin. Coins that fell shortly after exaggerated highs are bad investments as they suggest pump-and -dumb pattern. Invest in coins with steady and gradual price movements.

7. Does the crypto have a utility case?

Coins with utility cases that aim to solve real-life issues in their communities are the best to invest in. For example, Ethereum provides a platform where numerous smart contracts, DeFi, and NFTs are built. Bitcoin offers a cross-border payment option and store of value. In comparison, utility tokens are created to serve specified functions. Lastly, some namecoins thrive mainly on social media types. Avoid coins without utility cases or whose purpose is logical.

DISCLAIMER: It's crucial we tell you that the content on this page is not meant to serve as, nor should it be construed as, advice in legal, tax, investment, financial, or any other professional context. You should only invest an amount that you are prepared to lose, and it's advisable to consult with an independent financial expert if you're uncertain. To obtain more information, we recommend examining the terms of service and exploring the assistance and support resources provided by the issuing or advertising entity. Our platform is dedicated to delivering accurate and unbiased reporting, but it's important to note that market circumstances can change rapidly. Also, be informed that some, though not all, articles on our site may be sponsored or paid content.

Chad Butler
About Author

Chad Butler

Chad Butler, a renowned name in crypto journalism, excels in translating complex blockchain topics into lucid prose. His astute analyses and timely updates make him a trusted voice in the cryptocurrency landscape. Through his articles, Chad consistently offers readers an informed and insightful perspective on the evolving digital market

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