The cryptocurrency market is still in its infancy, and the price of a specific coin is usually driven by emotions. Unfortunately, it appears to be impossible to make a forecast that would be 100% accurate. There are, however, some indicators you could consider when deciding whether to invest in the digital currency or not. The tips below were kindly provided by Crypto Quantic Ph.D. during his interview with us.
The first thing I look at is the market cap. Sure, the overall crypto market cap will probably increase, but I'm not relying on that. Instead, I look for coins that would need to 5 or 10X just to be competitive with similar currencies that are already succeeding. Here is what I look for:
Step 1: Look for coins in a popular use case category—payment processing, privacy, gambling, etc.
Step 2: Look at the top market cap coins in that category.
Step 3: Look for valid competitors that have significantly lower market caps.
The coins with the most potential may "look" like they are nearly dead, they may be down a significant amount this year, but I want to see evidence that they are stabilizing, i.e., trading in a narrow price range for a while. This often happens before a big move up.
To avoid coins that are actually dead, I look for signs of life like a daily trading volume that is at least 1.5–3% of the market cap. So a coin with a $200 million market cap should see, say, $4 million of daily volume (look for consistent average volume, not just daily spikes).
Now, your entry price matters a lot—don't fomo in. You can watch for a solid break of a critical level and buy on confirmation. And be sure to set stops. I am not a fan of "HODL no matter what." It's better to get out when things aren't working out and look for another chance to enter than to ride the trend all the way down and be out of the game!