If you’re investing to make money, why aren’t you maximizing your return? You need to be able to find the best crypto to invest in.
Everyone invests with the interest of turning a profit, but not everyone is careful. Real profitable investors take their time and find the gems that will give them the longest, most fruitful returns. First things first, get the goal of quick profit out of your head as quickly as possible.
Sure, people have jumped head first into crypto, made head-spinning gains and ran off with the profits in less than a month. This is more due to luck that investment skill – that’s just reality.
Carelessly throwing money at an investment without the proper due diligence is a huge risk. It’s sloppy. In the long run, it will likely lose you money.
To be a profitable investor, you have to evaluate every investment prior to buying in. You need to understand not just what it is, but why it matters and how likely it is to become the next big thing. You’re not going to find the best crypto to invest in by chance.
Listen. Project research isn’t the most exciting. It is the tried and tested path to becoming a profitable investor over the longer term. Think about it – would you rather throw your money at random assets and hope to get lucky, or carefully pick and choose and massively increase your success rate?
The only secret behind finding a profitable investment is thorough due diligence. So, without further ado, here are 9 aspects of a crypto investment you should consider when you are looking for the best crypto to invest in.
What is the product?
First and foremost, you have to understand what you are investing in. Sometimes this can be tricky. There are loads of buzzwords thrown out there to make projects sound more complex and interesting than they actually are.
Dig into the whitepaper and reviews of the project and get your head around what they are offering as a product or service. Then you can evaluate whether you think that product is a good idea.
Tokenomics and utility
Tokenomics = the economy behind the token
Utility = the use case of a token
When you are investing in a cryptocurrency, you aren’t buying shares, equity or anything of the sort. You are going to be buying a token or coin, the value of which comes from the service offering behind it.
Since the value of the asset is derived from the offering behind it, the tokenomics and utility are very important. The more useful the token is, the more potential value it has in the ecosystem, which can lead to value increase.
On the flipside, if a token has no solid tokenomics or utility, there is no reason for it to be purchased or used, which doesn’t bode well for future value.
Progress – Promises vs Action
Crypto projects are all ambitious. That’s how they draw in investors. But you’re on the hunt for the best crypto to invest in. You’re not going to be suckered in by shiny things and complex words.
If a project has been around for a significant amount of time, be it 3 months, 6 months, a year or more, they should have some progress to show that proves they are living up to their promises.
If you can see that a potential investment is moving along their roadmap nicely and consistently hitting deadlines, providing updates and sufficiently pleasing investors, then that’s a great sign.
Bottom line: don’t get suckered in by roadmaps. Make sure the project has the means and intentions to follow through on their plans. This can be judged by their previous ability to release updates and hit deadlines.
What’s the target market like?
This is often under appreciated in crypto due diligence, but it’s massively important in traditional investment and it certainly carries over to crypto.
How big is the target market? Are there many competitors? If there are, how does the project you want to invest in compare to the competitors?
Check it out and see if there is room for this project to complete. If there is, do they have a good chance of winning?
When you’re looking to find the best crypto to invest in, an active user base goes hand in hand with target market research. If a project already has a bunch of users actively using their service, that’s a good sign. It means they are doing something right.
Of course, users are only important if the utility and tokenomics is on point.
How experienced is the team behind this asset?
Now, don’t let a relatively unknown team put you off. However, if there is a strong team with a lot of experience running the show, that could allude to some future success.
While it’s a touchy subject in crypto, partnerships can be very valuable to these start-up businesses.
If the project your are investigating has legitimate partnerships with big name brands and companies, that could very well be a good sign. Do make sure you dig into the details of the partnership. Don’t take the announcement at face value.
Research what the partnership exactly entails, how long it might last and whether it could actually have any effect on the business success and ultimately the asset you are considering investing in.
The community behind a project can be telling. Use their sentiment to gauge how the project is performing. Look at how engaged the community is and look out for projects that have just pumped up their social metrics through artificial means. That’s a bad sign.
Use market cap to see the valuation of a project. It is a direct representation of how much the market thinks a project is worth.
Many people think the best crypto to invest in is one with a small market cap because it has a larger growth potential. However, others prefer medium and large market caps because they suggest the project is more established.
Either way, you can use market cap to see where this project stands, valuation wise, compared to all the rest.
Time to find the best crypto to invest in!
When you’re assessing your investment opportunities, do yourself a favour and run through this list and check everything out. It could save you some money and make you even more.
Remember, this isn’t an exhaustive list of fundamentals to review. However, it’s a good start and should get the ball rolling on your research.
It’s important to mention here that a project does not have to excel, or even perform, in all of these fields. For example, Bitcoin does not have a strong team behind it, or a bunch of partnerships on the horizon.
Above all else, use your common sense and make sure you do your own research.
Finally, if you’ve found some coins with strong fundamentals, tweet them at me and I’ll let you know what I think.
About Alex Aves
Alex is a crypto enthusiast that has been enthralled with the crypto space for over two years now. He currently works in the marketing team for Liquid, one of the leading crpytocurrency exchanges. Alex is passionate about spreading knowledge, introducing more legitimacy to crypto and stopping traders from losing money. If you reduce your losses, your profits will grow.
You can follow Alex on Twitter here.
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