If there’s something we’ve all learned since cryptocurrencies starting appearing at every street corner, is that you can easily fail and lose your money if you pick the wrong ones to invest in. If you are investing in altcoins, fundamental analysis will help you choose the ones with the best long-term potential and the ones that can bring you some profits.
First of all, you should prepare for extreme volatility in this ecosystem. It is often that cryptocurrencies surge up to 40-50% in a single day. Keep in mind that the cryptocurrency market is also driven by emotions, and the fear of missing out (FOMO for short) is a huge factor when you consider investing in a coin.
Try to master your FOMO and not freak out and sell other assets just to invest in a single coin when you’re seeing big spikes on the charts. Analyze and decide based on as much information as you can find online before making an investment.
If there’s something we’ve all learned since cryptocurrencies starting appearing at every street corner, is that you can easily fail and lose your money if you pick the wrong ones to invest in. If you are investing in altcoins, fundamental analysis will help you choose the ones with the best long-term potential and the ones that can bring you some profits.
The first thing you should know is that all investments will have their pros and cons. Don’t be discouraged if things are harder at the beginning. If you put some effort into it, you will develop skills and observe investment opportunities over time.
Firstly you should take into consideration the deal-breakers. I’ll point them out below, and if they exist, you should not invest any more time in those cryptocurrencies, as they are most probably going to fail.
Finding the right information about cryptocurrencies can be challenging for a few reasons reasons:
- Either the information doesn’t exist yet or it is very hard to find
- Sometimes there aren’t any means of verifying if the source is reliable or not
- Understanding some parts of the information can be beyond your technical abilities
- It can take a lot of time to read, understand and assimilate
There are a lot of platforms out there, that have information for different aspects of every coin. For this article, we’re going to use coincheckup.com because it has a large amount of information on the listed coins and will ease your cryptocurrency research up to the point of just going there and seeing 70-80% of the important information on any single coin.
Knowledge is power, in the investment world as well. In order to assess whether a cryptocurrency is worth investing in or not, we have to first know where can we get the information from. USC Group Daytrader & Analyst, Zissou told us what’s the first step when looking at a cryptocurrency.
“Depends on the approach and if you’re a bottoms up or a tops to bottom kinda guy in terms of analysis. If I get excited about macro, I dig deeper. Optimally, you want a fundamentally strong project. Then you just apply Technical Analysis to find good entry points”
Even though Zissou is a Daytrader, he starts his analysis by looking at the fundamentals. In this article we will not get into technical analysis because that’s a whole different subject. You’ll find this CNBC article as well as this BU.edu post of great interest in their opinions on bitcoin investing.
The cryptocurrency market has evolved at unprecedented speed over the course of its short lifespan (compared to other assets). Since the release of Bitcoin to the public in January 2009, more than 1,500 cryptocurrencies have been developed, the majority with only a mediocre success. Here’s a video that will give you an even better understanding of how 4 years look like in terms of new cryptocurrencies and ICO activity.
Yes, you can research background info on each cryptocurrency on their websites, forums and social media channels but this will take a lot of time and it’s nearly impossible to compare cryptocurrencies. In order to find out more about any cryptocurrency you have to do hours of research, most people don’t do this and they put themselves in a dangerous situation by investing in cryptocurrencies that simply have no solid fundamentals.
If you’re a very analytical person, another approach to investing in cryptocurrencies is following their momentum and doing the technical analysis on the charts. If your looking to invest for the short term and focus on investments that show the highest chance of profit in the next few days or up to one month, you can try this. There were people who had different levels of success with such strategies.