A guide to DYOR before hammering that green buy button
We are not stopping you from aping like a true degen, but maybe just follow this guide every now and then...
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Market Review
One week has passed, lots has happened and in the end, we are basically at the same levels as exactly 7 days ago (and as mentioned already two weeks ago). Bitcoin is trading at $28,400 and Ethereum at $1,790 right now. Bitcoin is looking strong these days and even the news about Binance getting sued by the CFTC didn’t lead to a significant decrease in Bitcoin price.
Once more we broke into the resistance area of 28.5-30k and currently staying in exactly that range. For more uptrend in the short-term, we would love to remain in this area and ideally swap it into support with a few daily candles above 29-30k and retesting 28.5k afterwards (and holding it). If that happens, another 20% move seems likely. On the downside, the current range low of 26.5k should hold, otherwise, we could revisit the previous lows and the uptrend is on hold for a few days.
After our prediction of a run towards 29k became reality, we continue to expect to retest some of the previous lows in the next weeks. A test of the 25k area remains likely before we potentially see more of an uptrend. In any case - we love this current volatility as we can dollar-cost average into the markets and just make sure we are prepared for better times to come.
What else happened this week:
CFTC sued crypto exchange Binance and founder CZ and CY promptly replied
Chad Saylor and MicroStrategy purchased 6,455 Bitcoins for around $150 million, with an average cost of $23,238 per Bitcoin - usually, we see a dump right after, still waiting this time…
Faith in humanity restored! Do Kwon has been arrested in Montenegro
What to do BEFORE you hammer that green buy button
Crypto is risky and your hard-earned money can be gone in the blink of an eye. In this edition, we will guide you on how to evaluate whether a token is worth investing in or not. By the end of it, you'll know exactly what to look for. Let’s dive right into it!
Apply common sense 🧠
Sometimes, you don’t have the time to do a days-long review of the project and its team. And you do not have to. It is not rocket science and around 50% of scams or bad investments can be filtered out by applying just a bit of common sense. If a website has spelling errors and reminds you of those from the early AOL days, if the team is all anonymous or looks like the folks below, or if a Telegram group with 40,000 users is filled with bots only, something smells fishy, and you probably should not invest.
But for those projects where you want to invest for the long run, it's good to check a few before buying. Here's what you should check:
1️⃣ Check Team & Project
➡️ Project
Fancy stories and flashy marketing can sometimes generate a lot of buzz about certain Crypto projects, but they may not actually have much substance. Cover the following:
Is the project alive and does it have a community?
Check the project's website or social media pages for information about the project. To find them, use the token cashtags (e.g. $FXS) on Twitter.
Check Telegram and Discord for community discussions. Look for high chat and post activity and non-price-related discussions. It's okay for meme coins to have those price talks, but legitimate projects should focus on discussing project development.
Check GitHub, and review the project’s coding activity. While a lot of projects hide their code, it can provide insight into their development progress and the level of community involvement. And if you don’t understand coding, at least check for GitHub activity.
Check on Crypto Reddit for discussions and opinions about the project. Be careful, some might have the interest to promote the project for the wrong reasons.
Visit Tokenterminal to see if the project is already generating revenue, which could be an important factor to consider.
Obviously, the best thing to do… ask us on Twitter, and we may be able to help you out.
Does it solve a real-world problem? Or is it just the 10th Uniswap clone?
Honestly, crypto projects don’t have to be unique in order to make us some money. But it will surely help with making it a rather bulletproof investment. Check if they got a unique approach or just copy an existing project. A new clone of Uniswap might be rather useless, the same project on a new blockchain might be the next big thing.
Is it hyped and/or has a strong narrative? Often you can catch hypes and narratives easily. The Arbitrum airdrop hyped up the tokens in the ecosystem; Chat GPT hyped up AI tokens. Another simple way to figure this out is by looking at the Category Performance on Coingecko.
➡️ Team
Honestly, common sense too. Can we judge if a 3-boy Asian team is better or worse than a diverse group of 20 Ivy League developers from the US? Probably. But jokes aside, what else can you simply check?
Is the team anonymous? It's an orange flag, as it makes it hard to assess team’s credibility and track record.
Have any team members worked on reputable projects in the past? Research the team's background if you have names available for a proven track record or notable projects.
Are they well-known in the crpyto space? Check for active community involvement and positive industry reputation. If you can tick the box here - BOOM, jackpot.
Often you find
Team 👎 or 👍? This is how to check:
Check the project’s website and Twitter, search for their team and main stakeholders
Check the names of team members on Twitter and LinkedIn and review their work history and experience
You often find main investors and stakeholders on the projects’ website too. You see Mumbai Investments? Maybe leave it. You see Binance listed as investor? Might be a good deal.
If there's no information available about the team or they're located in a third-world country, it's a warning sign and at dark orange flag (with a slight tone of red).
2️⃣ Check Tokenomics
Does low price equal big opportunity? Nope. To determine the actual token value, you need to consider the circulating supply of tokens available as well. You can easily find this information on CoinGecko, provided that the team managing it is doing so correctly.
Example of BNB on CoinGecko:
Market Cap ($53,432,813,761) / Circulating Supply ($157,895,234) = Price ($338,13)
Supply metrics - Most cryptocurrencies have a 'Max Supply' limit for the number of coins in circulation. The 'Circulating Supply' shows the number of coins being traded or held in wallets. Knowing the difference between maximum, circulating, and total supply is key to understand whether the project is exposed to high inflation or not. High inflation can be a risk for new projects with many tokens yet to be unlocked, causing selling pressure when new tokens are released. To keep inflation low, the circulating supply should be close to the max supply.
What is the role of the token within the project? And with that, we also need to determine whether the token you purchase from that project has actual utility. While some projects aim to resolve issues, their tokens may actually be worthless. So, are the tokens used to...
vote?
pay in-game items?
tip?
pay network fees?
Tokenomics 👎 or 👍? This is how to check…
Check CoinMarketCap or CoinGecko to understand circulating and max supply.
If you want to understand when the remaining tokens are to be unlocked you can check if the data is available in CoinGecko here:
If you can’t find the tokenomics, check out these two websites:
3️⃣ Check The Overall Market
If you can tick the box ✅ on most above, it's up to you to decide if the current market sentiment is favorable enough for investing. You probably noticed already that Bitcoin's price is tied to the equity market and is seen as a risk asset rather than an inflation hedge that the Bitcoin maxis promised us. Despite bear markets, some past projects still managed to perform well.
4️⃣ All good? Buy
When it comes to buying tokens, it's up to you to decide which option is best for you. Reputable centralized exchanges like Kraken are a popular choice for their user-friendliness and insurance policies - for example, Kraken insures your money up to $100,000. Decentralized exchanges (DEXs) offer more privacy and control over your assets.
5️⃣ Our Recommendations
DYOR and not financial advice! Projects we are looking at:
Arbitrum (ETH Layer 2, most projects build here!)
SNX (derivatives liquidity protocol providing the backbone for derivatives trading in DeFi)
GMX (Utility and government token for a decentralized perpetual exchange on Arbitrum)
GRT (decentralized protocol for indexing and querying data from blockchains, first mover advantage)
BTC and ETH (always good)
XRP and LTC, sometimes we wonder why these are still in the Top15. But both (might) have huge events coming up and actually are outperforming at the moment
Next week we're putting out a special newsletter again - this time diving deeper into airdrops and detailing some strategies on how to qualify for those airdrops that we see as being the most promising out there… Stay tuned for next Thursday!
Action for this week
In this section, we will summarise the main actionable items from each newsletter and other posts that are worth reading
Not too much actually, maybe read back on our last newsletter in case you missed it and get yourself familiar with airdrops - in time for our in-depth strategies next week
Oh, and get off Binance US if you are US citizen. It is not looking good for Binance (in the US at least)…
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