Many people lose money on projects either buying it on first day of trading or later. The only reason why they lose money is they don't do any research about the project if it's a new coin they just see it got listed and jump on it or if it's an existing coin they're buying it because their friend told or they heard about it on social media.
In this article we will learn how to do #BlockchainAnalysis of a project before buying or investing in it.
We will start with a newly listed coin. Lets say Binance is about to list a coin and what should you do before you buy it right after the launch ?
1 - WhitePaper
The number one and the most important part is read the whitepaper of that specific coin. This will give you each and every information you need to know about the project including introduction , Tokenomics, Roadmap , Investors Everything you should know.
2- Find out if there was an ICO (initial sale) for the coin.
Coins usually do a presale before the public launch to raise funds against the coins. Find out if the coin you're about to buy had any presale and If there was any what was the sale price.
3 - Total and Circulating supply
Find out how much will be the total supply of the coin and how much is circulating at the time of launch.
4 - Coin's Category
What sector of the technology they're focusing on? is it Ai , ecosystem, gaming ,layer 1 or 2 or any other crypto narrative. Crypto is a trending market and you have to make sure the coin you're buying falls in the category that is trending in crypto right now. It can be Ai , meme or any because crypto keeps changing the trend.
5- Price Comparison
Once you get all the info wait and see at what price the coin is launched. Compare the gap between the ICO price and the launch price.
if the price is too high then it's always better to wait for a pullback, Early investors will always want to sell and can give you a better buy price.
6 - Marketcap
What's the marketcap of the coin at the time of launch. If it's too high it's not worth buying right at the launch. it's most likely launched at higher prices and people who got the presale or free airdrops will rush to cash out. In my opinion marketcap should no be above $150Mil for a new coin if it's launching on binance.
7 - New or existing coin
Find out if it's purely a new coin or already trading on other exchanges.
8 - Free Airdrop
Find out if there was a free airdrop of this token. if there was an airdrop that means there are people who got that coin for free and most of them will want to take that free money. Do not buy it right after the launch they will probably dump on you.
Once you find out all of these details. Now ask yourself should i chase this coin right after it launched or not?
My personal suggestion to you : Don't buy a coin right after it launched
Watch the price action for a few hours
Let the coin build a base price.
And then you make your decisions .
This was the #BlockchainAnalysis for a new coin let's discuss how you can evaluate an old/existing coin.
How To Evaluate An Existing Project
Marketcap
The first thing you need to check is the marketcap of the coin. The higher the marketcap the less risky that coin will be because there will be less volatility on that coin compared to a low marketcap coin.
High marketcap coins have high liquidity that makes it less volatile.
How to check marketcap of a coin?
Just simply go to coinmarketcap and search for the coin you're looking to check the marketcap you will be able to see it. For example here is the marketcap of Bitcoin.
Marketcap plays an important role in any investment. The more the marketcap is the better it is for a secure investment.
If you're a high risk trader then there are always coins with less marketcap and high volatility.
Trading Volume
Then comes trading volume, You have to make sure that the coin is being traded actively and the market is not dead, The higher the trading volume the better it is. it indicates that people are trading this pair.
it's so easy to check how much volume is being traded on a coin. Just open that pair and you will see the volume
Here is the 24hr volume of Bitcoin on Binance exchange.
Fundamentals
One of the major metrics of any coin. You have to make sure that the project is fundamentally active.
You can always check it on their social media handles or their website that what they will be doing in upcoming days or weeks or whatever the time span is. Read their roadmap if there will be any activity. Because you have to make sure that the project is still active and not dead.
These Are the metrics that you can consider before investing into any new coin or an Existing coin.