It’s been a while since I posted some useful information today. Brothers, please remember to share and forward it to others. I’d like to share some useful information on how to evaluate the potential and valuation of a project.
Since we are talking about valuation, we must not ignore the ceiling of the same track. We can compare the token models of the leaders to assess the initial potential and advantages and disadvantages. Then we can discuss the valuation of the token by looking at the listed exchange, trading volume, project community sentiment, etc.
Of course, no matter how you judge, everything is inseparable from BTC. Only when the BTC market is rising well, the emotions are greedy. At this time, the main force only needs to make a little effort to obtain a lot of liquidity. The evaluation at this time is the most authoritative. Of course, it is undeniable that there are also counter-trend pulls, but they are really too few. What I remember most is that the BNX I recommended in the last bear market was completely a counter-trend pull, which was thirteen times the entire bear market. If you still remember it, please tell me.
Then, if we combine the rising cycle, the market will rise under such conditions: the phase of loosening monetary policy (April 2020-2021), the end of the first phase of interest rate hikes (after the midterm elections) (end of 2022-2023.4), the phase of suspending interest rate hikes (from October last year to now), after the first interest rate cut, the second interest rate cut begins (in line with the increase in liquidity) (November 2019 to February 2020). You can compare these timelines to see if they are like this. How much the market will rise depends entirely on the market's mood, so first of all, we must have a simple understanding of the market.
Then we can look at the tracks that occupy the top ten or the top one hundred, and compare them with the top ten public chains, memes, blockchain games, defi, oracles, and infrastructure in the previous bull market. So why are these hyped up? Let's not go back to why AI has been hyped up for so long. The reason is very simple. Because the US stock market is hyping AI, the liquidity in this circle will naturally come.
After knowing what is hyped, we can go back to look at the token model, the exchange, trading volume, etc. First, we need to know the current circulation rate, the current market value, the current price valuation after all the releases, and whether the unlocking mechanism is reasonable. For projects that unlock very quickly, if the initial circulation market value is relatively high, we can compare the ceiling with the valuation of full circulation to see whether the price is reasonable and how much space is left compared to the ceiling. In this way, we can basically see its final potential. Some projects really represent the ceiling price when they are launched. In the face of the huge amount of unlocking in the future, the market value remains unchanged but the price keeps falling.
After the launch, the market value is only 1 to 2 billion, and only BN can take it. This is the valuation after full circulation. The initial circulation of each project is different. If the initial circulation is very low but the expected valuation is very high, whether this can be played depends on the unlocking mechanism mentioned above. There is no good example here. You can only rely on yourself to slowly explore. Some brothers like to trade based on trading volume. Trading volume is the most deceptive. As long as it is not a sudden increase in volume, everything is defined as a market maker. Market makers will provide liquidity based on the market value of the project. Take BN as an example. Normal liquidity will be maintained at 10-20% of the entire market value. There is no accurate qualitative description.
Furthermore, if you want to understand a project, you must check out how the community is doing and how active it is, and what the mood is like. You can check out the official dc or tg website to find out, and then check out how the project is being operated. In simple terms, it is to see whether it is doing anything.
That's about it. Learn the valuation logic method, accumulate experience, control your greed, and sell at a price that makes money. I hope everyone can accumulate their own trading system. The market volatility is very high, don't expect to get rich overnight. Stay rational and calm, set reasonable investment goals and expected returns. After all, you are not the market maker of the project, you don't know the resources and plans in his hands, you can only guess through the actual situation, such as the market, emotional fomo, the ceiling of the track, etc., to try to sell at a good price before the market maker cuts.
Control greed, be realistic, remember, and estimate the market value of the project party realistically. Finally, let me tell you something more sinister: you must leave the market before your expected value. Human greed will make your expected results higher than the actual expected value. This is really hard to find and is a subtle influence. If you don’t believe it, just recall whether many stocks have risen very well, but they are almost falling from your expected value of leaving the market.
In fact, it depends on what stage the macro is in, whether the liquidity is good, and where BTC and ETH can eventually go in this round of main uptrend. The higher the price, the more funds will overflow and flow into the cottage projects. It will drive the market value of the cottage to grow, so we must grasp this essence. Of course, this is just an estimate now. We need to pay attention to the market situation and adjust the strategy. Control and adjust the valuation expectations. (At the peak of the last bull market, the entire crypto market value was 3 trillion, BTC accounted for 35% of the market, Ethereum accounted for 14%, and the rest all flowed into the cottage market) Combined with the current market, refer to how much will flow into the cottage market.
The expectation of interest rate cuts, coupled with the favorable stimulus from FASB after the election from Q4 this year to early next year, plus ETFs, will all stimulate a good market and may even usher in market liquidity in the event of a distant economic recession.
