How to Invest in New Crypto Projects
Cryptocurrency is growing in popularity, as well as the number of people interested in investing in promising cryptocurrency projects. Thus, a question arises of how one can invest in new crypto coins profitably.
Let’s have a closer look at what options are for those who want to invest in a new cryptocurrency and which of them are more convenient.
Why Investing in New Crypto Coins?
Those who purchased early coins such as Bitcoin or Ethereum became rich. This inspired other people to invest in new crypto coins. Another reason to invest in new cryptocurrency projects is for portfolio diversification purposes.
How to Buy Crypto Before Listing
Many people know that buying new crypto coins on decentralized and centralized crypto exchanges is possible. However, a new project’s journey starts before that. Initially, crypto tokens can be purchased during presales, Initial DEX offerings, and Initial Coin Offerings ICOs, and some even make their new tokens available via an Initial Public Offering.
What Are Initial Coin Offerings ICOs?
It was common for new projects to collect funds for their development via an Initial Coin Offering. Investors and usual users used to buy the project’s tokens with fiat money or established digital currencies such as Bitcoin or Ethereum in the hope that in the future, the token price will grow and they will benefit from the token value change.
An Initial Coin Offering is an unregulated way to raise funds. That’s why, even though many promising cryptocurrencies launched were using an ICO, this approach was criticized heavily and as a result, its popularity declined.
What Is an Initial DEX Offering?
An Initial DEX Offering is similar to an ICO. But in this case, projects sell their coins and tokens via a decentralized exchange.
It is a new way to raise funds and is much more successful than an ICO. However, it also has its limitations. So, using the DEX platform requires some knowledge; the liquidity level of decentralized exchanges is lower than the one of centralized exchanges, and thus, a project cannot count on the sums that used to be raised when ICOs were popular.
How to Choose the Right New Project to Invest Early
Investing in crypto is a risky venue, especially if a project is new and its future is unclear. That’s why it is important to conduct your own research before buying any coins and tokens.
What shall you pay attention to when picking new cryptocurrencies for investment? Here is a list of things to check.
A white paper
White papers provide detailed insight into a project. So, checking it is a mandatory step in your research.
How can you understand whether the project’s white paper is properly written?
First of all, it shall be written for all types of users and investors. It means it shall be clear to you. If you don’t understand what the project is about, most likely, it is not a good idea to spend your money on purchasing its tokens.
A good project’s whitepaper shall contain the following points.
Promising upcoming projects intend to solve a problem or perform some functions. Only projects that are made with some purpose can serve for investing and getting profit.
How the new crypto coins will be distributed, and under what conditions? Will new coins be locked after their initial distribution, or will crypto investors be able to just dump them all when the listing is done?
Will the token be inflationary or deflationary, and whether will there be a treasury to handle the market pressure and control the token price fluctuations?
All these details shall be mentioned in the project’s whitepaper.
The Cryptocurrency Project Founders
Most new coins are not created by anybody. Usually, promising crypto projects are launched not just by crypto enthusiasts but by professionals with some background in one or several relevant fields.
So, it is a must to check the project team profile. If you see there are people who have been working in the field for years, those who have some successful projects launched, it is a sign that the project has perspectives, and you can buy its token.
And whatever they sell, if the team is anonymous, it is always for a reason. They may not be experienced enough and, thus, prefer not to disclose their identities. Or they may have had some significant failures and prefer to be unrecognized. Whatever their reason is, it is better to avoid them.
The project technology
The project’s scalability, security, functionality, and other features are crucial for further success in the rapidly developing and highly competitive crypto market. If you see that there is a risk of compromising the security of users’ funds or data, if the project doesn’t have any option to scale, or if it is developed based on outdated technologies, it is better to avoid investing in it.
Cryptocurrency is decentralized. That’s why new cryptos are frequently community-driven, And as such, they are active on social media, where they publish updates on the project’s development, ask for their community opinions, and in general, communicate with people.
Projects that do not have their social media channels do not look like those that can be trusted.
The project roadmap contains all the team’s plans. Projects with a detailed roadmap (and a realistic one!) demonstrate their understanding of where they are moving, professionalism, and seriousness.
Where to Find Promising Projects?
There are different resources where you can find information about new crypto projects. First of all, we recommend paying attention to specialized websites. There, you can find reliable information and expert opinion to rely on.
Top ICO List
This resource provides valuable information on the most promising crypto projects that are going to have an ICO. There, you can access the projects’ whitepapers and one-pagers to get an idea about what the project is.
Also, there, you can find the list of the best ICOs, and the performance data on the past ICOs to see whether the project has already delivered some profit to investors.
This is one of the best crypto data aggregators that offer users and investors the most recent market data. There, you can find information on digital coin trading volume, soft cap, and other token metrics.
It also offers useful insights on new coins and their development updates, expert opinion, and other useful information about blockchain technology developments and new crypto projects.
This is one of the top crypto-focused tracking sites that provides useful token metrics and important data on established and new cryptocurrencies.
A list of ICO, relevant information, and the watchlist are also available.
ICO Bench is useful for looking for new promising crypto projects. It is a grading resource that uses data from experts and traders. The projects are graded based on specified criteria.
Token Metrics is another valuable resource for those who want to find the most promising projects to invest in. Deep dives, AI, and other information can be found there, too.
Have a Look at Cryptocurrency Exchanges
Where else can you find promising projects? Cryptocurrency exchanges have special sections where they list projects that are available for investment.
The most popular cryptocurrency exchanges that list promising token offerings are Binance, Coinbase, and others.
Social media is another valuable resource for finding promising projects to invest in. A Twitter page, a Telegram group, a Facebook page or other social media channels can tell you and other investors a lot about new cryptos and their advancements. There, you can also read the opinions of community members, which is also a valuable information source.
Crypto launchpads list projects that have investing perspectives. Launchpads usually perform their due diligence to choose the best options for token sales. Normally, those are projects focused on new market trends and directions such as decentralized finance, distributed apps, and similar.
By investing in new crypto through a launchpad, you have less risk of stumbling into fraudulent projects.
Precautions and Safety Measures Before Investing in New Cryptocurrencies
Investing in new cryptocurrencies is always risky. However, you can reduce the associated risks significantly by taking the following precautions.
Don’t Believe Everything You See Online
There are many methods to pump new crypto assets. In many cases, it is done artificially, and the crypto coins supporting such projects listed on popular platforms drop in value as soon as artificial pumping stops. Investing in such new coins will end up in losing your funds.
That’s why it is important to approach your research critically. If you see many insisting comments claiming that this specific option provides direct access to the future of the industry, but there are no objective data, be careful.
Stay Away from Suspicious Venues
Sometimes, it is difficult to assess whether a crypto project is genuine or if its developers care only about stealing your money. Here, the best advice is to check who is behind new cryptos. If you see somebody who played a crucial role in the Ethereum network development, most likely, that cryptocurrency venue is worth your attention.
Assess Your Risk Appetite When Looking for a New Crypto Project
One of the key takeaways is that many people became very rich by investing in crypto. But you shall understand that it doesn’t mean that you will become a millionaire or that at least all your funds invested in a crypto project will bring a profit.
Actually, most investments in different cryptocurrencies, including non-fungible tokens, end up losing money.
That’s why you should always invest only those funds that you can afford to lose. It is repeated everywhere, but there is a reason to do so. If you lose money in this highly volatile market, it will not impact your daily life.
Diversify your investment portfolio. Consider not only sales of a new token and new cryptocurrencies but invest in widely adopted crypto coins.
All in all, investing in cryptocurrency requires some knowledge and is still highly risky. Each token you consider for investing shall be assessed very properly, with information checked on all the available crypto data aggregators, social media, etc. The Project’s website also shall be studied carefully because there the main takeaways of the project are present. Only if you consider all details you can count on a successful investment.
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Disclaimer. This material should not be construed as a basis for making investment decisions or as a recommendation to participate in investment transactions. Trading digital assets may involve significant risks and can result in the loss of invested capital. Therefore, you must ensure that you fully understand the risk involved, consider your level of experience, investment objectives, and seek independent financial advice if necessary.