How to research to invest in cryptocurrencies?
Content
Market capitalization.
Learn everything related to that cryptocurrency.
Find out what the project is about.
Buy the cryptocurrency.
Put cryptocurrency on your radar.
We live in the era of cryptocurrencies, and the use of cryptocurrencies is becoming more and more common in our jobs, online businesses, buying and selling products, etc.
This has caused many to dare to venture into this complex world full of financial opportunities. However, the lack of knowledge about how this crypto world works is very notable among users.
Thanks to this ignorance, many have failed in their investment projects, others have been scammed and there are others who have stagnated for a long time in their financial growth.
"Investing in a cryptocurrency project without conducting prior research on it is considered financial suicide".
There is no doubt that preparation is required, it is necessary for users to effectively research the type of cryptocurrency in which they want to invest. Failure to do so has been viewed by expert traders as financial suicide.
So, how can someone do that research to get off to a good start in their investment project? Keep reading because we will tell you how to do it below.
Market capitalization
The first step is to look at the market capitalization, that is, how much money has been invested in the cryptocurrency. For this you have two sites where you can look:
CoinMarketCap.com
CoinGecko.com
On CoinGecko, for example, you can find cryptocurrencies that are already listed on the market. Most likely, Bitcoin is at number 1 on the list, as it is currently the cryptocurrency where the majority usually invest.
There are some English terms that you should be familiar with in this world of cryptocurrencies, such as: large cap (large cap), mid-cap (mid-cap), and small cap (small cap).
Although this is usually very subjective, a large cap is usually the first 10 cryptocurrencies on the list. The mid-caps rank from 11 to 100. Finally, the small caps comprise cryptocurrencies that rank 101 and up.
Thinking about this, you can look at what types of cryptocurrencies are you looking for and what is its market capitalization, in order to know if it is really worth further research.
Therefore, if the crypto you are looking for is in the top 100 on the list, then it is worth continuing to do your research. But if you are in the small cap category, investing time in your research is not advisable.
This is so because when it is in that category, it may happen that this influencer will be paid to promote it.
Learn everything related to that cryptocurrency
The next step is to try to learn everything you can about that cryptocurrency, and the best place to do that is its website.
For example, if you are interested in investing in Polkadot and want to learn more about it, it is advisable to go to its official website and begin to find out what this project consists of.
You can also use Google to learn about a cryptocurrency project. For example, you put in the search engine that is Polkadot and you will see many pages that tell you everything that has been published regarding that cryptocurrency.
Another option is to watch videos or tutorials that you can find on YouTube. You simply go to the YouTube page and enter the name of the cryptocurrency you are investigating in the search engine.
If you have already decided to carry out your research through YouTube, it is best to watch videos from different YouTubers.
Because it will allow you to obtain different approaches to the subject, and you will be able to absorb the best of all of them and thus form your own concept about that cryptocurrency that you are investigating.
This is one of the reasons why it is not recommended investing in cryptos that are in the "small cap" category. Because when you want to investigate on YouTube, you will probably not find videos about it that can serve as a source of learning.
Also, the videos you find can turn out to be paid videos that will only tell you the positive about cryptocurrency.
But if you are interested in a cryptocurrency with high market capitalization, you will be able to find a lot of information from people who made videos because they believe in and trust the cryptocurrency, and not simply because they were paid to promote it.
Investigate what the project is about
Ask yourself what the project is about and what it is trying to solve, the point is that you understand what the purpose of that cryptocurrency project is. Because if you don't understand the project clearly, it is obviously very difficult to invest.
Another question you should ask yourself is whether that cryptocurrency makes sense. This is very relevant, since there are projects that the more you investigate about them, you will realize that they do not make much sense. Therefore, if you do not see sense, why are you going to invest in it?
The other question to ask yourself is whether this is needed now. Because there are cryptocurrencies that will become a platform for other things that will be built on it, as is the case with Ethereum, for example.
There may be a long-term project, but it may not be needed right now.
There are platforms on which smart contracts are built, which are already being needed. It is precisely in these cases where you can bet with greater force.
In general, on those platforms where smart contracts are built, applications are usually built on them, either as decentralized exchange houses or it can be used for NFTs.
These types of factors are decisive in deciding whether you want to invest in a cryptocurrency.
Buy the cryptocurrency
If you have already decided to invest in a cryptocurrency project, the next step is to buy. But it is not advisable to buy from now, because there are certain things that you should consider before making the purchase.
An important factor that you must take into account is its graph, you must see at what price it is currently at its historical maximum reached. If you see that in the graph the price of the cryptocurrency is reaching almost its historical maximum, it would not be a good opportunity to invest in it.
Maybe in the future if it has the potential to continue growing, but if we analyze it more coldly, it would not be advisable to invest when it is very close to a historical maximum.
But if you see that the price of a cryptocurrency is 60% below its all-time high, this would mean that it is a good time to invest. Because if you invest $100, that would represent a 100% profit.
Another factor is that you can see its graph for one year. If you see that the graph is not at highs but at lows, such as its lowest point at 5 cents and its current price is 11 cents, that means that there is a high probability that you will lose half of your invested capital.
But the best scenario can also happen, which is that it reaches its maximum and your profit increases up to 28 cents for example.
In this way you can visualize both the worst and the best scenario and take it as a reference to make a decision about whether to invest in a cryptocurrency and what are the risks involved.
If you decide to buy, what follows are to see in which exchange houses that cryptocurrency is available.
Put cryptocurrency on your radar
You can put it in two ways: one can be your mobile phone in the Coinbase app, since this allows you to add all your favorite cryptos in a list and there you can have the one in your portfolio and other cryptocurrencies that you are following.
With CoinGecko it is also another way to put your cryptos on your radar, so you can put them all in a list of your favorites to keep track of.
Whichever way you choose, with any of them you can keep track of your cryptocurrencies in order to stay up to date and know when is a good time to invest in the one you prefer.