The industry’s longest ever bear market may not encourage many people to invest in crypto right now. But while the naysayers like Warren Buffett are busy ringing the death knell for Bitcoin, there are still rays of hope here and there.
ICOs may be all but dead (with zero funds raised in March so far), but there are still plenty of viable projects a year or so on that you can buy into at a knock-down price right now.
So how do you know which projects to invest in when there’s blood on the streets? How can you tell where to put your money when plenty of crypto companies are folding?
According to non-custodial instant cryptocurrency exchange Changelly’s former CEO Ilya Bere, it’s important to make the distinction between speculative and true utility projects. Changelly works with 130+ altcoins and partners with Jaxx, Coinmarketcap, and other well-known players in the industry. When it comes to “backing the right horse,” he knows a thing or two.
“An investor has two options to make a choice,” he explains, “either learn the numbers of the current dry statistics or make their own assessment. But it would be even better to do both, thus to increase the possibility of making a profitable investment.”
Crunching the Numbers Isn’t Enough
What caused so many people to invest in projects that are currently circling the drain? Was it FOMO, relentless marketing, a flashy white paper, or superlative claims? Did they invest with their hearts instead of their heads or get excessively carried away by the numbers? Crunching the numbers isn’t enough.
One year later and it’s becoming clear that plenty of these quasi-legal projects will fail to stay the distance. It’s vital to analyze the figures when looking to invest in the right altcoin, but investing wisely in today’s market climate requires even more focus than that.
“To date, when the market declined, and tokens’ prices dropped, those investors who expected to get at least 6 times profit now cannot afford to count only on the side of statistics,” Bere points out. “Today we need to look at the bigger picture and rely on our financial intuition. Because even when the market is low, there are still undervalued projects that can potentially bring profit to its investors in the future. And that brings us to the second method of evaluating the performance.”
We already know how fast the crypto space moves. Even by the time you finish reading this article the market could have recovered or dropped even further. If you only look at the numbers, especially in the short term, you’ll be glimpsing a mere snapshot of a project.
For example, Digitex Futures, one of the latest altcoins to partner with Changelly, went on a wild bull run in October 2018, trading at over $0.14 cents and making a 50% gain in just 24 hours. The token then began to drop steadily once again closing the year around $0.03.
The fall had nothing to do with a security breach/a dubious team carrying out underhand dealings, or regulatory concerns — it simply accompanied market sentiment overall.
Today, a few weeks from launch, the DGTX token is gathering momentum once more, trading at around 8 cents. This is a reminder that you always have to look deeper into the context or you may be too quick to dismiss a viable project — or invest in a weak one.
You Have to Look at the Achievements
Says Bere, “The worthy project proves to be so within its best performing and the team achievements. Take the time to do a little research and to find out what has been done in a year. Talk about the project’s usability, its contribution to mass adoption, etc.”
Going back to the Digitex example, the company held its ICO in January 2018. It sold out in 17 minutes. Demand for its commission-free futures exchange has always been high, with a current waitlist for their product of over one million traders. But the company hasn’t delivered yet. So instead, you have to look into what it has achieved.
Partnering with Ethereum-approved Team Matter to work Plasma Protocol into its technology stack and offer non-custodial accounts is pretty big. Teaming up with Spotware trading platform experts to add traditional futures markets and trading tools straight from launch is also another bold move.
It’s these type of achievements and milestones that you need to look out for besides just whether the token price is up or down.
“It is first of importance to find the answers to such questions as–what exactly is the project? What team is standing behind it? It is worth drawing attention not so much to advisors and ambassadors, but to the team performance, to find out whether they follow the roadmap,” Bere emphasizes.
“In other words, you should go through all the checkpoints, which are usually issued during the standard process of venture investment. If you want to invest, it makes no sense to look at past rates. Instead, look at the team and its annual results.”
The Takeaway
There are no guarantees when investing in crypto. But then again, there are no guarantees when making any type of investment. In fact, if you do come across a project that offers 100 percent returns, head for the hills in a hurry.
Individuals may not have the same investor experience or complex tools to carry out due diligence on a project, but that doesn’t necessarily mean that they are at a sweeping disadvantage. Pay attention to the numbers, but don’t look only at the numbers and certainly not for short periods of time.
Look to the team — not only their credentials on paper — but what they’ve achieved over the last year. Have they hit their milestones? And if they haven’t, have they explained why not? Are they transparent and do they have a large community around them?
There’s no certainty that the altcoin you back will end up being a winner, but at this juncture, you can at least see that it hasn’t fallen at the first fence.
Follow your instincts by all means but also be sure to follow the above guidelines. That’s what VC firms do, that’s what top exchanges like Changelly do, and that’s what you should do as well.