How to Conduct Thorough Research on Crypto Companies
So you want to learn how to research crypto projects? Good.
To succeed in investing, you need to master the research game and learn how about market trends.
This Do-Your-Own-Research guide is a game-changer. Whether you have some experience or you’re a newbie, there’s something here for you.
So, lets talk practical tips for conducting thorough research on crypto companies
Why Should You Conduct Crypto Research?
Since 2021 highs, the crypto market has lost over 2 trillion USD. Some big players have collapsed in spectacular fashion. And, there’s always the risk of falling victim to the plethora of fraudulent projects and outright scams that plague our industry. So, you need to learn to familiarise yourself with the critical aspects of projects.
So let’s begin with why analyzing a project’s key purpose is essential during your research.
Overview – Project Website & Whitepaper
First, you’ll need to understand the crypto’s project and its main objectives and goals.
The first research step is to visit a projects’ website and find its whitepaper. When reading the whitepaper, you should understand what the project is about. The document should cover the underlying philosophy, core tech and preferably, it’s pros/cons. If the messaging isn’t clear, doesn’t make sense, waffles, or is straight BS, abandon the project.
By now, you should have an idea of the asset’s potential value in the crypto market.
Make sure you take some time to look at the team and admin personnel in charge. Pinpoint its founders and visit their social media profiles. Use your instinct to determine whether you can trust this project with your cash. Check for red flags like anonymous Twitter profiles or executives who are not doxxed. If they claim to have advisors or backers, check those out for authenticity purposes.
It’s crucial to research the project’s founders, team, and educational history to know about its past experience in the market.
What Are Crypto Fundamentals
In the crypto space, DYOR means digging deep into a cryptocurrency’s fundamentals. Make sure you reflect on the following fundamentals before investing in a certain digital asset:
- How the project works
- The type of technology
- Total Value Locked (TVL)
- Development Activity
- No. of Wallets supported
- Revenues & Fees
- The Product’s Growth
- Team Growth
Understanding the type of token you’re going for is crucial when researching a project. First of all, you must understand how a specific token captures value. It could be a work token, a utility token, or cryptocurrency. Next, take all the time you need to analyze the token’s overview, CEX listings, DEX activity, core economics, token activity, and token utility. Most importantly, ensure you keep an eye on the project’s fundraising progress, i.e., its token allocation or vesting schedule.
Does the project have partnerships? If yes, examine the partners to estimate the project’s potential. Some projects tend to go for external partners, while others stick to native partners. Looking into the project’s partnerships and competitors will show how promising the project’s solution is to the market.
Remember to inspect the partnership from the partner’s side to confirm that it’s all valid. Don’t fall for a trap! Some projects claim to be in partnerships with authoritative corporations, while in reality, it’s total BS. If the project has any competitors, you should identify their use case differences and levels of development. This will give you knowledge about its competitive upsides, drawbacks, and other essential aspects.
Milestones, Catalysts & Risks
Roadmaps will define what the project seeks to achieve within a specific timeline. For example, suppose the project is set to do complex milestones within a short timeframe. In that case, you could be looking at a red flag. An unrealistic goal is a sign of poor vision from the leadership team. Likewise, issues like missing the set milestones or delayed deliveries are also red flags.
When announcing milestones, a promising project should educate its users about milestones, catalysts, and risks.
Social Media And Community
Social media and online communities are rich sources of information about a project’s initial performance and current status. Social media platforms reveal what users are saying about the project. You should analyze its Twitter account, Instagram and LinkedIn if it has one.
Moreover, a project with a dedicated community of enthusiasts online is usually considered a green light for a promising project. You’ll find these communities on Discord, Reddit, Slack, and Telegram. If the project has an active and vibrant audience, track their engagement and listen to external critics from developers to check for any bias or fraudulent claims.
In the crypto world, the history of an asset usually defines its current and future performance. Therefore, tracking a particular project’s chart patterns is a crucial component. The price chart of a project’s token is supposed to help you understand the asset’s previous patterns based on its technical analysis. Using the project’s chart patterns, you can quickly identify its future potential. This means you’ll know where the project has come from and where it’s headed. Tracking its initial price patterns is essential for traders looking out for a project’s future breakouts or reversals in the crypto market. This evaluation will be a significant factor during decision-making and identifying potential investment opportunities.
Let’s Wrap it Up!
A wise man once said, ‘If I had an hour to chop down a tree, I would spend 45 minutes sharpening my axe’. Doing your own research is essential before making an investment decision, especially in the crypto market. No matter how promising a digital asset looks, you’re advised to assess and double-check the project wisely before making a move.
If online information sources don’t give you the answers you want, consider consulting experienced individuals for more accurate data and their thoughts regarding the particular crypto project. Don’t just run to anyone unless you trust them in the first place. All it takes is patience and baby steps to gain the experience to conquer the crypto market to your advantage.