Did you know that as of the end of April 2021, there are 1641 "dead coins", meaning a cryptocurrency that has ceased to exist? By a rough approximation, the total value of those coins rounds up to almost 2b dollars. Let me say that again: TWO. Billion. Dollars. Imagine all the people behind those 2b losing their life’s savings, borrowed money or what not.
In an attempt to help my friends and family avoid picking random coins to invest in, I’ll share how I do my research and select the crypto coins I'm investing in, as well as the amount for each. Plus, bonus, how my portfolio looks...at the moment of writing this piece. Because it’s changing (almost) every week.
I begin on Twitter. I follow a bunch of accounts:
- Willy Woo (@woonomic)
- Coin Bureau (@coinbureau),
- Omar Bham(@crypt0snews),
- Hayden Adams(@haydenzadams),
- Lark Davis(@TheCryptoLark),
The reason I picked these influencers is that they are either great crypto analysts, crypto founders (Hayden), or news aggregators, allowing me to see different perspectives on the topic.
If you’re serious about this, I invite you to the rabbit hole. Go all the way, check who these people follow, and then who those people follow and follow them. Basically over-follow. Then cut back on those this-doesn’t resonate-with-my-mojo kind of profiles, keeping the good ones in.
There is no recipe for success here. I usually unfollow whoever is constantly negative or bashing other projects or spamming (sharing more than twice per day).
Moving on. What do I usually look for?
Posts like "What altcoin do you think is undervalued right now?" or "What altcoin will you never sell?". Then I look into the comments, and I try to see which coin is mentioned most often, and/or liked by the most users once it's mentioned.
With the top 2 results from this, I dig until I reach bedrock, and then dig some more.
As you can probably tell, by now it’s past 2am and we’re deep into the rabbit hole and vitamin water.
1. I take a look at what this project is trying to achieve. Then I google "[altcoin] competition" to see who competes for the same niche, and who is more advanced or has a more solid roadmap, investors behind etc.
2. I look at the team. Can I find them on their website or on Linkedin? Or is it all hidden? Are they having a solid track record? Any sign of shadiness means they are losing points on my credibility score.
3. I look at the all-time high indicator(ATH), which can be seen on CoinGecko or Coinmarketcap. If the ATH was recent (within the last 7 days), I'll wait for another few days, because it's too heated right now, and it will probably go down a bit, or the possible gains vs risk level is not in my advantage.
4. I check where it can be bought from. Is it on major exchanges already like Binance, Coinbase or can it only be bought from Uniswap or other smaller exchanges? Not being listed on major exchanges yet, means to me that I won't invest more than 0,5% of my entire portfolio yet, just a personal rule.
5. I go back on Twitter, and search for the coin, to see what is the general sentiment around it, how big and active the community is. I lurk a bit on their Discord or Telegram channel as well.
Whichever coin scores better at the above, I decide to buy. And sometimes I'm genuinely impressed by both, so I might buy both.
How much do I invest in a new coin?
I start with 0,5% of my entire portfolio, if not listed on a major exchange. If listed, probably 1% is a good test. Either way, I let it run for 1-2 months, to see how it evolves, as well as see if there are any new mentions on Twitter around it. If it has stable growth (no major up/downswings) I re-evaluate and I might invest more, by selling a low-performing altcoin to buy this new one which I believe might have better potential.
Re-evaluation is done by looking at the community (is it growing, is it actively engaged on social media), the tokenomics (how is the split of the initial coin offering, is it more than 30% allocated to founders and early investors and if yes than for me its a red flag), how does the roadmap look like (have they been consistent on delivering on their milestones, are there exciting new milestones coming up next?).
Bonus: how my portfolio looks at the moment
During my time of investing in crypto, I've done some really great investments but also some really, really stupid mistakes.
One of these mistakes was investing in Swingby. It was in my early days of crypto investing, and I heard from someone who heard from someone that this project has a massive potential, because it wraps BTC into wrappedBTC, allowing a broader usability for BTC (building a bridge). And the only real competitor at that time was Ren, which was a few steps ahead only. Convincing arguments?
Good enough for my beginner knowledge and beyond-cloud-9 enthusiasm. So I invested 12000 EUR in it, following updates regularly, participating in their Discord channel, helping with promo on social media. You know, like a good community member. I even convinced some friends to buy some.
The only problem was that it was already at 0,8 $/coin, and after a short rally to a little over 1$/coin, it crashed to 0,6$/coin and now it stays in the range of 0,04$/coin.
At first, I kept telling myself (and my friends) it’s just a phase, keep holding. But after a few months it was clear that I just had to accept the loss, and learn from it.
My learning: do your own research and never trust a friend. Or even worse, a friend of a friend.
After all these learnings, here's how my portfolio currently looks like.
Solana = 48%
Elrond = 17%
Polkadot = 9%
Raydium = 9%
Arwave = 5.5%
Ada = 5%
Matic = 4.8%
One = 1.7%
I need to mention that Ada, Ray, Matic, and One are staked.
Hope this puts things into perspective. Now is your time to make some moves!