Are you also looking for the next x1000 coin that can be life-changing ? The next Doge or Shib ?
Often we look a lowcap coins to check if they have the potential to realize a strong increase in price over a relative short period in time.
On social media you will see (often paid) influencers presenting lots of new tokens as gems that can make you rich.
Before investing in a token, it is worthwhile to do your own research and to check a number of indicators to make sure the token is in good health.
What to check ?
Check the number of followers on Social Media : How many followers does the coin have on Twitter, Telegram, Facebook, Discord, Reddit, ..
But the number of followers itself does not say everything : on several social media fake followers can be “bought”. So do not only look at the total number of followers, but check also if those followers do interact with the coin team : Are there sufficient followers that “like”, “retweet”, “comment”, … the messages ?
How many holders does the coin have ? Via Coinmarketcap you can look for the coin, and then click on “Explorers”. You can open the blockchain explorer of the coin, and check how many blockchain wallets are holder of the coin. Successful coins often have more than 500 000 active holders. Of course a new coin will have less holders. But then you have to check how many blockchain transactions (“transfers") the coin has. When a coin only has a limited number of transactions per day this can be a warning sign that not many persons buy the coin. Successful coins have many hundreds (or thousands) of transactions/transfers every day.
Which % of the maximum number of coins is already in circulation ? If a coin has a “maximum supply” of 100 million coins, but the ”current circulating supply” is only 1 million, this means that 99 million coins still have to be dropped on the market. This could negatively affect the price, so you have to take this into account in your evaluation. Coinmarketcap also shows the “Fully Diluted market cap” : A coin with a marketcap of 1 million USD seems to have a lot of growth potential. But the current marketcap is calculated on the current circulating supply. If this current circulating supply is only 0.1 % of the maximum supply, this means that when all coins enter the market at the current price this coin has already a marketcap of 1 Billion USD. And then price increase is less obvious …
Check if there are “whales” that can control the coin. Via the “blockchain explorer” you can see the list of holders of the coin. If there is a holder that controls more than 10 % of all coins, this holder can have an important impact on the price of the coin.
Check also the daily trading volume of the coin on exchanges. When the coin has a high marketcap but a low volume of daily trading, it is worthwhile to investigate the coin much more in depth before investing.
And of course : does the coin have a "use case" ? A coin that has a real world usability (in DeFi, payments, gaming, AI, metaverse, ...) has more chances of success than a coin without clear use.
Good luck in finding the next crypto gem and remember : investing in crypto involves risks, so never invest more than you can afford to lose.
