Dec 08, 2022

5 Things to Focus on When Investing in Crypto Tokens

Discovering a new promising token to invest in is always exciting. However, some cryptocurrencies can be just as risky as they are profitable. That’s why both newcomers and seasoned investors should proceed with caution.

Here are 5 important things that each crypto trader should keep in mind when dealing with a newly-discovered token.

1. The project behind

As a rule, the best crypto projects for investment are those that have some utility beyond pure speculation. They are valued for the ideas and innovations they bring, or can potentially bring in long-term goals. Price of such tokens grows as the project is being developed.

Good examples of such projects are Solana, Avalanche, Pancake Swap — those are both cryptocurrencies and utility tokens that support own blockchain ecosystems. To make sure the project’s applications are practical, research their website, team and whitepapers.

Of course, there can be exceptions, such as Dogecoin. It was created as a meme coin with no actual value, but randomly became a flipping success.

2. The community

Each notable token has a community of believers. If you are thinking of investing in a new crypto, try to explore its community on Twitter, Reddit, LinkedIn and other socials. Find out what people think about this token.

The size of the community doesn’t matter — the token’s Twitter account can have as much as 1K followers, but they should be true supporters and actually real people. No project can thrive when it’s made up only of shillers, who just keep asking the same repeated questions: “when presale” or “when to the moon”.

3. The dev team

Developers can also say a lot about the project’s potential. To make sure the token is worth your trust and money, research the team behind it. Information about developers can be found on the token’s website, but don’t be lazy to google more data. Look up for those people on Github, Codebase, LinkedIn and Facebook to see their activity and previous projects.

You may say: “Okay, but Bitcoin was created by anonymous Satoshi Nakamoto!”. Indeed, some developers prefer to stay unrevealed, and it doesn’t mean that every anonymous project will fail. Still, you need at least some guarantees to be sure you can get refunds if the project will not be successful.

4. Historical data

Before buying a new coin, it will be helpful to look through its past and current performance on the market. Right now, the industry is suffering another bear trend, so many tokens are going down in price. 

Explore how the selected token behaved during previous downtrends. How much time did it take to recover? Did it reach a new price peak? Did investors stay faithful to the coin, or did they pull out? This analytics may help you to predict the token’s potential price in future.

5. Stay tuned!

Once you have done your little investigation and decided to invest, don’t kick everything into the long grass. Purchase some amount of tokens, and monitor their performance during some period of time. See how market sentiments are changing and decide if you want to buy more.

Pay attention to other coins that have performed better than yours during the same period of time. It may encourage you to diversify your crypto portfolio — and that’s just what professional traders do.

P.S. Hope these tips will help you to make a right and informed decision before diving headfirst into a new project and buying up their token.

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