If you are interested in investing in cryptocurrency individually or institutionally, there are important questions that you should pay attention to before trading the markets. Cryptocurrencies have allowed a large number of people in our country to make small fortunes over the past few years. However, most of the investors have lost all or a significant portion of their money in this sector. That is why it is so important to make the right investments with SafeTrading. We present to your attention 6 golden rules that crypto signals investors should pay attention to.
Infrastructure
Perhaps the most important point is what kind of infrastructure the project you are investing in is using. What infrastructure does the crypto asset you invest in use? For example, if it is a BEP-20 token produced on the BSC network, you can do it yourself. This way, you can easily create your own token at a very low cost.
The same can be said for the ERC-20 token created on the Ethereum network. There are thousands of these tokens in CoinMarketCap, and people invest in these projects without caring about their infrastructure, just hoping for a profit.
For example Bitcoin, Ethereum, they set up their networks with the Blockchain algorithm they created. This is how they live their lives and they also advocate for more crypto networks. Crypto assets with different names can be obtained from the Ethereum or Bitcoin network.
Before investing in ERC-20 and BEP-20 tokens, you should think carefully and study them in light of the other golden rules. Otherwise, you will see your money disappear by investing in weird crypto assets like Sedat Peker Coin.
Market value
The main data that measures the size of crypto assets is “market value”, for example, with $ 640 billion, Bitcoin is the most valuable crypto asset. It is followed by Ethereum and Tether. However, there are some pitfalls in the market cap data that investors can easily fall for.
The market value of crypto assets is calculated using the following formula.
Market Cap = Current Price x Circulating Supply
But some new projects (especially theirs) are offering trillions or even quadrillions to easily increase market value. This allows the market value to grow rapidly at very low volumes. If the team that created the project started this business with a certain capital, it can create artificial volumes and sell assets from wallet a to wallet b, paying only a commission. This increases the volume and naturally leads to the fact that the price also causes an increase in the market value.
It also gives investors of crypto signals the impression that “this token has reached a good volume and its market value is high.” Therefore, study which transactions on which exchanges receive volume that creates market value. Go to the exchange where the token has the highest volume, and are robots or humans making purchases? Study it, check if he is constantly buying and selling. If in doubt, do not make this investment and do not risk your money – says the manager of SafeTrading.
Price history
One detail that investors in the new era especially overlook is the history of prices. Since they have not seen a bearish period in recent years, they have the impression that the corresponding crypto asset depreciates at the slightest drop.
So let’s ask: if BAKE drops 50% right now, would you buy it? Is this a cheap price? Of course, many cryptocurrency investors might think that BAKE has become cheaper just by looking at the drop rate. However, BAKE is now 128 times more expensive than January, so even if the price falls by 99%, it can only touch the bottom of January.
Current prices do not always reflect the true value of a cryptocurrency. A significant part of this can be inflation, prices generated by pressure from timber producers (whales), or prices can be horizontal due to insufficient volume.
For all of these reasons, look into past price changes for the cryptocurrency you will be investing in. If a project has strayed too far from the ATH point and hasn’t made headway this year, it probably won’t bring you any return on your long-term investment.
On the contrary, if the last bull rallied too much and fell slightly, it could be a risk for you. A serious downtrend in the near future could lead to a fall of this cryptocurrency by more than 90%.
Community
We are not talking about the artificial communities that have become this propaganda and marketing tool for meme tokens. Almost all of these communities are early stage investors, and their only goal is to attract more people to projects and exit the token with a profit of 10-50 times. They strive to get rich easily and pump up coins like crazy, which they invest in social networks.
However, these early investors should not mislead you. So what should you do? Explore your social media accounts and visit SafeTrading approved channels.
However, these early investors should not mislead you. So what should you do? Explore the social media accounts of the project you will be investing in, research trends in Google and social media searches. Explore which funds the project is partnering with and what the size / scope / strength of those funds is. Try to find answers to the question which fund managers support this crypto asset and why. Also check out the successful projects these fund managers and famous investors have supported in the past. Always be wary of the assets of popular analysts who advertise projects on a paid basis, and keep a close eye on how close they are to the truth.
Demand
This is due to market value and price history. Be sure to research the demand for the crypto asset you will be investing in. Try to reach the number of medium / long term investors defined as holders and which exchanges have trading volume. Examine how many assets are held in active wallets and how uniformly these investments are distributed across wallets. For example, check out our newsletter titled What is Pitbull Coin (PIT), where you will see detailed information on the distribution of users who invested in this token and the amounts in their wallets.
At first glance, the data exchanged between network analysis systems can be misleading. For example, an organization claiming to have 250,000 active wallets may have overstated that figure itself. Explore at random how active these wallets are and how they move. If there are a number of wallets that are automatically created by project managers and only a certain number of tokens are transferred, and they are all powered from the same source, you should be careful here. Always be skeptical about your investments.
Act like a bank giving a loan to a client. When you start analyzing the project, give it 100 points and drop from 100, giving negative points every time you make a negative impression. If you are satisfied with the remaining score after completing the research, you can invest. However, for many tokens, you will immediately see that their number has dropped to minus. In this case, you can make short-term trades at the risk of losing your money. For example, agree to say that when it grows 40%, I will sell it and know the likelihood that my money will be dumped. Then, when you reach your target price, quickly avoid those investments!
Promise
This is the most important question. What does the project promise you, that is, what benefits does it bring to the ecosystem? Ask yourself questions such as why would people invest in this project. The relevant cryptocurrency must have a roadmap page on their website.
The roadmap is the most important part of a cryptocurrency. Here you can see what the project is aimed at and what it has already done. Beware of new projects that make wild promises and whose development team is anonymous. Keep in mind that the hope of selling assets often fails. Be sure to ask why the whole world will use A Coin or those who say we are better than them all!
