HOW TO DO PROPER RESEARCH BEFORE INVESTING IN ANY CRYPTO PROJECT ?

When we see any cryptocurrency video or read any article related to cryptocurrency, it is always mentioned that “ It is not a financial advice, always do your own research”. But what does it mean to always do your own research and how one can do proper research. That is what we are gonna discuss in this blog.

WHAT DOES IT MEAN TO DO YOUR OWN RESEARCH ?

Do Your Own Research is a common crypto slang used by crypto enthusiasts. It is commonly used throughout the social media to protect investors from wrong information and false rumours. It aims to reduce the count of uninformed crypto investors and it also encourages them to research properly and understand the crypto project before investing so that they can make right decision and gains huge profit.

HOW TO DO PROPER RESEARCH -

In any basic research there are basically three types of analysis what we have to do. These are - Technical analysis, sentimental analysis and fundamental analysis. Many people thinks that only one type of analysis is sufficient before investing in any project, but i would advice to always do all the three types of analysis for choosing a right project to invest.

Now let’s know about three types of analysis in brief -

1. TECHNICAL ANALYSIS -

Technical analysis is basically the study of past price of an asset. With cryptocurrency technical analysis, you look at statistical trends, charts and also at historical volume & activity including the price movements and price swings and make educated guesses on where the price is going over the short term and long term It. This technical method of analysing fluctuations in value may work well for crypto, but you have to act quickly as crypto market is very volatile and you can experience major ups and downs in price. So, the looking at charts can be proved helpful.

2. SENTIMENTAL ANALYSIS -

Sentimental analysis is the study of what everyone is feeling about that particular crypto project especially to see what main players think and feel. This generally includes journalists, influencers,hedge fund managers, and economists, imvestors, etc. But sentimental analysis can be easily manipulated, difficult to analyze and also not long term in nature.

3. FUNDAMENTAL ANALYSIS -

Fundamental analysis is the study of the actual ideas, team, and progress of a particular crypto project to establish the intrinsic value of an asset or project. By analyzing a number of internal and external factors, the main goal of fundamental analysis is to determine whether the given asset or project is overvalued or undervalued. There are various tools to do the fundamental analysis. Some of which are discussed below.

TOOLS THAT HELPS IN ANALYSIS -

The main goal of the research is to find a suitable project for investment. If you wanna earn good profits you must have to put time and efforts in doing research. Here we are going to see some factors to study before investing.

1. TOKENOMICS -

Tokenomics basically means economics of an asset. Initial tokenomics is a great source of data. You can view tokenomics of any project on website or read their whitepaper. In tokenomics, the first thing to find about a coin is that weather it is inflationary or deflationary. Inflationary means that the coins will continue to be created i.e. the supply is unlimited. Inflationary assets usually decreases in price as time goes on. The opposite of inflationary is deflationary, that means the market cap of coins will decrease with time. Deflationary assets usually increases in price because supply decreases with time. Bitcoin is a mixture of inflationary and deflationary, right now it is inflationary, but when all the 21 million coins will be mined, it will become deflationary.

2. HOW COINS ARE RELEASED -

There are many ways to release a coin like initial coin offerings, premine presale and also algorithmic ways. Some coins are sold to private investors, others are given out to early users, and some are mined by miners.Some tokens are also given to the users through air drops. This is one of the important thing to find out how does the tokens initially get out to public. Each of these methods affects the overall tokenomics.

3. KNOWING TEAM -

Knowing about the team behind a project is very important. Because if the team is good and reliable, more and more people will trust the project and eventually it will turn out to be good investment. Moreover, a well experienced team knows it very well how to make a project successful. So, its must to acknowledge yourself with the team behind the project for making a right decision to invest.

4. PARTNERSHIPS -

Look for the partnerships the project is collaborating with in its journey. If the project is Partnering with multinational and successful companies, then it would be a good indicator of the project. This means that the project will survive long and may go larger adoption and make advancements.

5. SOCIAL MEDIA -

Social media is the most powerful tool we have to know about anything. Many cryptocurrency influencers on social media shares their views about various crypto projects which also helps one to understand the project properly.

6. READ WHITEPAPER -

Another great source of fundamental analysis is to simply read the project’s whitepaper. Whitepaper is an official paper where the developers describe the problem and how will they solve it. This is a technical document that provides us an overview of the crypto project. Whitepaper offers great information about project and you must read it before investing in any project.

7. CHECKING WALLETS OF CRYPTO WHALES -

Crypto whales are those individuals or people who holds a large amount of cryptocurrency. If the whales have also invested in the same project you want to invest then it can be a good sign and it can be a reliable investment.

8. TO KNOW ABOUT GOAL OF A PROJECT -

It is must to know about the goal of any crypto project or to know what problem is it solving. Most of the crypto projects which serves a solution to any existing problem have gain huge acknowledgement and become successful. For example, bitcoin the first ever cryptocurrency solves the problem of inflation, Ethereum solves the problem of intermediaries like expensive and slow banks and also introduced many other applications like smart contracts, Chainlink provides blockchain off-chain information. So, its better to know what problem the project is solving for making, if it is any.

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That is all about today’s topic. Always remember to do your own research before investing in any project and also consider the factors we discussed in this blog. If you liked this blog share it with your friends.