Hello everyone
I am Yudong
Besides going to the primary market to play with tokens, if just picking coins on exchanges to gamble on high-multiple altcoins, Yudong suggests looking at the following aspects: low market cap, fully circulating, hot concepts, and project team's activity level.
1. Low market cap:
Low market cap projects usually have greater growth potential, especially in bull markets; once they gain market attention or funding injections, their price increases may far exceed those of high market cap projects.
• Initial market cap and comparative reference: The valuation of low market cap projects should be compared with similar competitors. If it has similar technology or application logic to a project with a higher market cap, there may be a possibility of undervaluation. For example, a Layer 2 project with a market cap of less than $100 million could have ten times the upside compared to Optimism, which has a market cap of $10 billion.
• Trading depth and liquidity: Projects with low market capitalization typically have poor liquidity and high volatility, so it is essential to ensure that the project has a certain level of trading depth to avoid the risk of 'dumping'.
• Bull market capital effect: During bull markets, funds tend to flow into low market cap projects more because their prices rise faster and are more noticeable, easily attracting speculators to follow suit.
Risk: Low market cap projects are easily affected by whale control and manipulation; investors need to pay attention to their token distribution and capital flow.
2. Fully Circulating:
The token supply of fully circulating projects has completely entered the market, eliminating the risk of selling pressure from future token releases. This provides investors with a more transparent trading environment.
• Comparative advantage in releasing pressure: Uncirculated tokens may exert significant selling pressure when released later, whereas fully circulating projects avoid this issue, making them particularly suitable for short-term speculators and bullish investors.
• Token distribution rationality: Is the token distribution of fully circulating projects healthy? Is it overly concentrated in the hands of the team or early investors? Diversifying token holders in fully circulating projects generally reduces risk.
• Market psychology: Fully circulating projects are more likely to gain investor trust, reducing market worries about future selling pressure, which helps stabilize price trends.
Risk: Even if fully circulating, if market demand is insufficient or the project's fundamentals are weak, it may perform poorly due to a lack of financial support.
3. Hot concepts:
Projects that stand on market hotspots are more likely to attract funds and attention, and their prices often grow rapidly during bull markets.
• Current hot direction: Hot sectors like AI, DeFi, NFT, GameFi, Layer 2, etc., represent key areas of market capital flow. For example, the AI + blockchain projects and meme coin sector performed exceptionally well in 2023. For instance, projects combining AI and NFT, like SingularityNET, experienced significant surges due to the hot outbreak.
• Combining hot concepts with innovation: Is the project genuinely based on hot innovations? Does it have technical support to avoid being a 'hype' concept?
• Projects genuinely based on AI technology are fundamentally different from those that just add 'AI' to their name.
• Hotness sustainability: Does the chosen hot concept have long-term value? For example, Layer 2 is the future trend of blockchain, while some meme coins may only have short-term popularity.
Risk: Hot concepts may lead to valuation bubbles, requiring evaluation of their authenticity and sustainability based on fundamentals.
4. Project team's activity level:
The development progress of the project and the execution capability of the team are important references for investment decisions. Even if a concept is very popular, if the team does not continue to push forward, it will ultimately lose market trust.
• Development activity: Are there regular code updates (which can be checked through tools like GitHub)? Projects with high activity indicate that the team is continuously pushing for technological implementation. For example, Polygon (MATIC) had exceptionally frequent development activities around its mainnet launch, attracting significant attention.
• Community interaction and transparency: Is the project team actively engaging with the community? Do they regularly release progress reports? Projects that are highly recognized by the community are more likely to gain long-term support.
• Applications and collaborations: Does the project already have actual applications or collaborations? For example, partnerships with well-known institutions or enterprises, or broad adoption within the ecosystem. For instance, the actual deployment of DeFi applications and NFT markets in the Solana ecosystem has been a significant reason for its rapid rise.
Risk: If project progress is too slow or significantly deviates from expectations, it may lead to a loss of market confidence.
Considering these four dimensions, everyone should prioritize projects that simultaneously possess low market cap, full circulation, hot concepts, and strong project progress; such combinations often perform exceptionally well in bull markets. For example: a fully circulating project with a market cap of less than $100 million focusing on a hot concept (like AI + blockchain) and an active development team may become the next potential coin for a massive surge.