If you’ve ever watched any cryptocurrency video (some have credible information), you’ll also notice that the creators of the video say “this is not financial advice” or “Always do your own research”.
Most of us have no idea where to start.
In this thread, I’ll be describing what I do to perform research and things that you may not have already thought of to look at.
But you must acknowledge that this is not investment advice.
There are three types of analysis we can do.
- Technical analysis.
- It is the study of a past price of an asset. It’s mostly looking at charts and making intellectual guesses based on how other people had made their move in the past, which then produce certain patterns. ( Seeing the past patterns of investment and predicting the same for the future)
- One can’t really make a great decision by only looking at charts but it can definitely be helpful from a trading perspective.
- Sentimental analysis.
- It is the study of what everyone is feeling about a crypto coin. We can’t really measure what people are feeling directly. But what we can do is look at the words that they use on the Internet and sum it up by asking what is the market saying or crypto influencers saying about a project.
- Look at conversations in forums and news articles all around the web. Compile them together, and then come up with something called a sentiment score that tells you if people are saying good things or bad things about the project.
- Remember it can easily be manipulated and usually isn’t long-term in nature, and also difficult to analyze. Many people don’t have the knowledge to perform sentimental analysis.
- Fundamental analysis.
-
This is the study of the actual ideas, the team, and the progress of a specific project.
-
F1==>The goal of research. It is to try to make an investment look bad. This might seem counterintuitive, but we (humans) are very biased. Any project can look good, especially if it contains a new and unique idea. But it takes a lot more effort to make an investment look bad. So, if you try really hard to convince yourself that it’s a bad project and you’re not convinced, then it might be a profitable decision.
-
F2==>Ask yourself, how many other people are going to buy this coin or token. The coins and tokens are essentially securities. And most of these projects do not have profit-generating mechanisms, meaning that most will only be profitable if other people buy the coin or token. Hence ask yourself “Can I see a million other people finding out about this coin and then buying it?” If the answer is yes, then you’re probably staring at a very profitable project.
-
F3==>The next is to ask this most important question, what problem are they solving? Can the token be ranked high? How are they going to use your money to solve that problem? To do that, read the white paper. The white paper is an official paper where the developers describe a problem that they want to solve, how they want to solve it, and why they are going to do it.
-
F4==> Tokenomics. It is a fancy word for saying economics of an asset for early coins and a great source of information. You can view the tokenomics on a project’s website or in their white paper.
Tokenomics, have different categories to look into. It will be part 2 of this DYOR thread. If you have any questions, please let me know and I’ll try my best to come up with an answer asap.
And I will try my best to elaborate in a very simple manner.