Often, in the cryptocurrency market, tokens show high profitability. For example, in early October, the Shiba Inu cryptocurrency, as well as other “meme” cryptocurrencies, went up by 300% in a week. It is extremely difficult to predict such movements, since they often occur for no apparent reason. However, there are some factors that suggest the possible growth potential of the token, writes RBC Crypto.
There are certain triggers that can be a sign of short-term “success” of a token, but most of them are extremely risky investments, warned Nikita Zuborev, senior analyst at Bestchange.ru. According to him, there are many projects in this niche that will disappear without a trace or become worthless. Even those rare cases when a token shows significant growth, it has exactly the same chances to depreciate in the next hours or even minutes.
Zuborev stressed that he does not recommend doing such a practice. However, for those who nevertheless decided to try to purchase such a token, the expert outlined several rules.
There are several rules for what to do categorically:
- Buy a token at a time when it has already shown a multiple growth (increased by more than 100%), even if you expect a growth of more than 1000%. Especially if the majority expects it;
- Do not use “stop-loss” orders, as well as use too small percentage of acceptable deviation. Such tokens have low liquidity and it is relatively easy to manipulate their price; therefore, deep squeezes are allowed in trading pairs, especially shortly before explosive growth;
- Use margin trading or leveraged / collateralized funds. The maximum you can afford is an isolated margin position with no more than 2X leverage;
- Use all investment capital for risky operations. Allocate no more than half, and preferably no more than 20% of the total budget for the search for such tokens;
- Blindly trust signals from paid, free, open and private groups and conversations. In most cases, advisers and analysts “point the finger to the sky”, relying only on their own experience and personal preferences.
There are certain parameters by which one can predict possible success, the analyst explained:
- Authors of the token parasitize on the Elon Musk brand. Any names with a mention of space, dogs, a specific breed of Shiba Inu (Shiba Inu) or Ilona himself, in most cases, are doomed to a powerful “pump” by fans;
- If signals of a possible rally appear in some large communities, you can listen to them, but not put everything on the line. One can spy on the sentiments of large social groups, the most famous of which is the WSB;
- If there is a connection between the project and the landing page, staking, free-to-play or any other “DeFi way” of earning, then the probability of long-term success is above average;
- If the projects are affiliated with previously created successful tokens or personalities of mathematicians and programmers from the cryptoindustry;
- If the project has signs of serious PR and newsjacking (logical or linguistic connection with a recent major scandal or high-profile event is played out);
- The token is associated (or tries to appear so) with a major global brand. It can be either a fan token of a football team or tokenized derivatives of a conditional AT&T.
The highest profitability can be shown to tokens of successful projects, added Anton Kravchenko, CEO of Xena Financial Systems. He explained that most often behind such coins is a well-known company (Binance, FTX and others) and funds have been raised for investments in the ecosystem ($ 250 million in Solana from Andreessen Horowitz, $ 100 million in Algorand). But it must be remembered that where high profitability is also high risk, Kravchenko warned.
When choosing a project for investment, first of all, it is necessary to pay attention to what the project offers to the market, whether it solves some real problem existing in the cryptocurrency market or changes any service or product from traditional markets, explained the financial analyst of the Currency crypto exchange. com Mikhail Karkhalev. According to him, the idea of the project should be not only grandiose and promising, but also real.
The second important criterion is the project team, the analyst is sure. In his opinion, it is necessary to assess whether the developers are coping with the assigned tasks and whether they have successful experience in launching crypto projects. After that, it is necessary to study partnerships, integrations and investments, Karkhalev said.
“If a business develops and grows, it will certainly acquire partners, any integrations with other blockchains, projects or companies. Well, and accordingly, such projects, as a rule, easily receive investments from well-known funds, ”the analyst explained.
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