How to Research Cryptocurrency – The 7-point Strategy
If you’ve been in crypto long enough, you probably know that asking others for advice can be a total waste of time. Most people are not qualified enough to justify their opinion and those that do, usually keep it to themselves.
It is for that reason that crypto-related questions are often left unanswered or, even worse, answered wrongfully. No one is interested to do the thinking for you. You will have to do that yourself.
Knowing how to research cryptocurrency will not only save you lots of money, but it will also improve your future investment decisions. In other words, being able to identify potential opportunities can increase your successful investments.
In this article, I want to introduce you to a 7-point research method that I use to research the cryptocurrencies I am interested in.
Essentially, I will show you how to gather up all the traces and potential opportunities, lay them side by side, and decide whether or not a coin is worth investing in.
After reading this guide, you will be able to execute this strategy and get a better overview of the characteristics that can increase a coin’s price.
You will also be able to download a custom-made sheet to help you group all the information in a more efficient way. Let’s get started.
How to Research Cryptocurrency
Doing your own research is all about getting different angles and opinions. Searching through forums, watching Youtube videos, talking to people… all these are simply tools in your toolbox. The more tools you use, the higher more confident you will feel in your final decision.
Each tool/method is used to get a better understanding of the sentiment surrounding a coin, as well as the future plans that may increase its price. I will outline each method separately and give you some tips regarding their application.
Method 1: Exploring Social Media platforms
Social media should be taken very seriously. Each platform offers specific insights and the past has repeatedly shown us that, when a coin is heavily “shilled”, it should see an increase in price.
Here is not the place to ask for advice, as most people are simply there to follow the crowd. The point is to see what the masses are attracted to – what coins they will likely invest in.
Facebook has two big groups that are worth being a part of. These groups are very active and usually keep you updated with the latest news and upcoming events. When I perform my research, I will usually read highly engaging posts and comments made by group members. The two groups you should follow are:
Crypto Coin Trader – This group is heavily moderated and counts more than 115,000 active participants. You can easily access not only other members of the community but also the admins, which are more than willing to help you out.
Crypto Traders News – Another great group with more than 52,000 members. You will often see talks about altcoins but no promotional stuff. I use this source to learn more about new cryptocurrencies as well as understand the general market sentiment.
When it comes to Facebook, I like to apply the 80/20 rule. Focus only on the most important Facebook groups to get the majority of information.
I use Twitter to better understand the sentiment surrounding certain cryptocurrencies as well as the market in total.
Here, in contrast to Facebook, I believe that you should follow a lot of different people that are experts in their field.
Follow financial analysts, researchers, accredited investors, and popular traders. Then, follow some crypto-celebrities as well. You never know who the next John McAffee will be.
Depending on your goals, your list may look significantly different than someone else’s. I’d start by recommending a few people you should follow to stay up to date with Bitcoin. Then, build up your list around them based on the cryptocurrencies that interest you.
Twitter accounts you should follow for Bitcoin news
- @Apompliano (avid Bitcoin maximalist that gives a good overview of the current sentiment)
- @super_crypto (author of one of the most controversial crypto article)
- @thecryptomonk (great trading experience)
- @real_vijay (another great author on Bitcoin and other cryptocurrencies)
- @whalepanda (popular Bitcoin maximalist)
- @ErikVorhees (founder of ShapeShift)
- @aantonop (educator, author, and Bitcoin legend)
The seven individuals mentioned above will, in most cases, offer information regarding Bitcoin before any news publication does.
Try to apply the same principle for other coins that interest you. Look for people that have previously managed to “pump” a coin with their tweets. Look for people who are very much invested in a certain altcoin. If you manage to act upon news when they are still rumors, you will make great profits.
This messaging platform is great when it comes to updates, trends and market sentiment analysis.
With some experience, it will be very easy to spot which groups are legit and which are infested with fake followers and bots.
Even if you join a legit group though, things can get very noisy and you should take your observations with a grain of salt. I like to follow groups that support a cryptocurrency and observe the overall mood:
- If people are too optimistic without logical reasoning, I will assume that a cryptocurrency may rely on marketing instead of the actual product. In this case, it is not worth investing in for the long term.
- If the general mood is negative, I will analyze the reasons behind it as well. If I find that the mood is profit-driven, I may consider checking other metrics before I make my choice.
- Good signs include groups that have managed to grow their Telegram account without using any sort of bounty or affiliate reward system and one where members are active. Bonus points go to groups that have their own dedicated moderators.
Start by following the official channel and group of the coin that interests you and try to extract information based on the three points above.
Unfortunately, Youtube has been poisoned with affiliate marketers. This, of course, is not a good thing, since platforms like Bitconnect took advantage of it. This resulted in prominent crypto-YouTubers promoting coins they did not even believe in, just so they could make some money on the back of their followers.
To be honest, when I think of how to research cryptocurrency in the best way possible, I prefer to stay away from Youtube.
Method 2: Analyzing upcoming events
Social media is a small piece of the puzzle. As with everything, you will need to get a global viewpoint. In this case, upcoming events can be a great information point, especially if you are able to identify how similar events worked in the past.
To do this, I use CoinMarketCal and search specifically for the coin I am interested in.
For example, I am personally very keen on getting more information on the future plans of Ethereum.
When I search for Ethereum on CoinMarketCal, I get the following result.
Based on the image above, Ethereum will upgrade to Ethereum 2.0 on the 3rd of January 2020 with 92% certainty (based on community voting and proof).
After a quick Google search, I understand that this news could have a major impact on the coin’s price since users will get free Ether on a monthly basis when holding 32 or more ETH in their wallet.
I am assuming that many people will want to hit that threshold and buy more of the cryptocurrency in order to create a source of passive income. Again, this is an assumption, but it is certainly worth exploring further.
You can do the same type of search for any coin that interests you and write down the dates of the event itself. This will help you make better short-term predictions.
Method 3: Research the fundamentals
As a long term investor, I like to check a coin’s fundamentals to discover which cryptocurrencies provide real-world usability.
In most cases, new coins are simply trying to do what existing coins are already doing, but better. This is not something that, in my eyes, will make the coin stand out.
- Building a “smarter” smart contract will not automatically make a coin more valuable than Ethereum (Check Ethereum vs EOS)
- Allowing more transactions per block will not make a coin better than Bitcoin (Check Litecoin vs Bitcoin).
What we are actually looking for is that 2% of coins that are trying to solve a real-world problem and have actual usability. The coins that bring something new to the table.
In most cases, this will be the most time-consuming process. Not only will you need to read through the whitepapers of each and every coin you are interested in, but you will also need to explore existing concepts and how these are currently performing.
Can these projects deliver upon their promise? Can the decentralization of a given industry improve user experience? Or is it simply a way for the founders to fill their pockets, as we have so often witnessed?
Method 4: Discover trending topics
This one is pretty important and often overlooked. When looking at how to research cryptocurrency, checking trending coins and events should be on the top of your list.
The best way to analyze the market sentiment is by getting a good overview of the number of people searching for a specific topic. To do this, there are many ways, some of which are better than others.
I have found that certain keyword tools can offer a great advantage when searching for trending topics.
For example, let’s take “Ethereum Staking”, since we also mentioned it in the previous chapters. I will use two keyword tools to analyze the topic.
I use Ahrefs to see how many pieces of content have been written on the topic, month-over-month:
As I am writing this, November has just started, which means that the last column on the right side is not applicable. But look at that candle in June and Oktober. They are definitely an indication of a trending topic.
After a little bit of snooping around, I realize that the candle of June was most likely caused due to a single tweet announcing the date for the Ethereum 2.0 launch date (check the “source” section in the CoinMarketCal example above).
The candle of Oktober correlates with a lot more information on the Ethereum 2.0 event. This is thanks to Ethereum’s official Twitter account, more media coverage on popular blockchain publications (such as Coindesk) as well as blog posts from the founder of Ethereum, Vitalik Buterin.
I use KWfinder to analyze the month-over-month search volume for a certain keyword. In this case, I am searching for “Ethereum 2.0”, since it is a term that I would use to search for this specific topic:
Can you see how the traffic picks up in a more steady way over the last year? This graph gives me confidence that Ethereum presents a great investment opportunity. If you believe the same, maybe you should buy some Ethereum (ETH) and hold on to it.
Other sources that will help you perform cryptocurrency research
The four options above act as the foundation of your research. On top of that, you can add additional research options to get a better understanding of a topic related to a cryptocurrency:
Method 5: Utilize the power of niche forums
First, you will get more in-depth information regarding the coin you are exploring as well as its upcoming events.
And second, you can talk with individuals that may be more experienced than you, by starting new topics on your point of interest.
Let me explain this by returning to the Ethereum example.
If I wanted to know the process regarding the switch of Ethereum to Ethereum 2.0, I could start a topic to find out whether I need to send my coins to another wallet, or how long the transition will take. This detailed information will help me better understand how the market may act before and after the switch.
Chances are, as soon as I post my new topic, some members will answer me with details I was previously not aware of.
Method 6: Go to crypto meetups
I first thought crypto meetups are lame. A bunch of people coming together, just to ensure that everyone believes the same thing. Or so I thought.
I first went to a crypto meetup during the depths of the 2018 bear market, simply to see what people had to say about the short-term future. To my surprise, people were extremely enthusiastic and saw the eventual recovery as something given.
Of course, having done my research, I believed the same thing. Still, it was really interesting to hear how others had come to the same conclusion. This is when I discovered more technical details that helped me craft the research strategy that you are reading today.
Method 7: Observe transaction volume
A more in-depth observation point can be made by looking at the transaction volume of a coin over time. According to a recent study by Bitwise, only ten exchanges show the real transaction volume of the coins on their platform. These can be seen below:
I personally check the transaction volumes of my favorite coins only on Binance and Kraken, since these are the two places where I have an account. Checking all ten will likely give more in-depth insights, but takes a longer time.
Wrapping Up On How to Research Cryptocurrency
So, now you know how to research cryptocurrency. There are several methods you can use. In this article, we explored seven options that, when combined, can give you a good indication of a coin’s potential.
Here are the different methods we looked into:
- Exploring Social Media platforms
- Analyzing upcoming events
- Research the fundamentals
- Discover trending topics
- Utilize the power of niche forums
- Go to crypto meetups
- Observe transaction volume
Applying this research strategy can act as a great start for better investment decisions and will hopefully lead to more profits.
Remember that every strategy, as well as it may be planned, will always be based on assumptions and calculated risk. There is no way to make a 100% accurate prediction. For that reason, always remember to invest only what you can afford to lose.