Guest Post

How to Evaluate Individual Currencies?

Written by: Coinpedia

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Coinpedia

Crypto Journalist and Editor of guest articles in CoinPedia. I am also handling Outreach & Partnerships Manager. Contact me: [email protected]

    Dec 20, 2021

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    When assessing the crypto landscape, it is not uncommon for investors to infatuate over certain currency names. Perhaps it is the currency’s management team that you find attractive, or maybe you like the rate of transaction. It could also be the narrative of the business driving the technology. Or, your gut feeling might well be the force behind your interest. 

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    Regardless of the reason, you should be wary of getting drawn to a specific coin. This attraction can force you to ignore the red flags, which can further exacerbate the problem once the coin takes a leap after you have invested into it, as it can propel you to hurl even more money at the currency. 

    Hence, if you do not want to get blinded, you need to make sure that you do not fall in love with a single coin. It is okay if you err on the side of caution and end up missing out on some of the gains. At the end of the day, it is better to be a bit late, than to commit too much too quickly, only to find the currency plummeting a few days later. 

    Understanding the Downsides:

    A key reason behind people falling in love with particular currencies is the short-term success that they enjoyed from their investments. If your plan is to invest 5% of your cryptocurrency portfolio, but you find yourself increasing that percentage to 15 and beyond, you have lost track of your original strategy. This means that you have tricked yourself into believing that the benefits you are generating will last forever, thereby leaving yourself with exposure. 

    To counter this, pretend like you have not made even a single cent by investing on the coin. This way, you can start over: evaluate the currency right from the beginning, look at the ways in which this currency is traded, the reason it is traded, and the frequency of transactions. 

    Then, compare these numbers against other coins, and see how they stand. Focus on the inherent risks associated with the coin. Research about the downsides that have not yet reared their ugly heads. Learn about the factors that will drive the currency price and value in the future. By performing this reset and going back to the start, there is a chance that you could identify critical situations that you initially overlooked – situations that could be avoided by not overinvesting in the coin in question. 

    On the other hand, if your research reaffirms your faith and confidence in the currency, you should determine an appropriate investment percentage in relation to your overall portfolio, and make sure to not peep out of this ceiling, no matter how tempted you might be. 

    Although to be fair, this is still a method of timing the market. However, if this is the only way that you can avoid increasing the risk in a dangerous fashion, then you can at least take solace in the fact that you are controlling your temptations. Since the crypto market is still relatively new and tiny and does not have the conventional trading structures in place yet, the above approach is still fairly understandable within the virtual currency space. 

    Final Word:

    If you want to be successful in the world of crypto trading, ‘objectivity’ and ‘rationality’ are two words that you need to commit to your memory. Through the approach discussed in this blog, you can assess every coin in an objective and logical manner, which will then allow you to make smart and beneficial trading decisions. If you think that you are ready to embark on your crypto-trading journey, please feel free to visit https:/bitiq.app/

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    Coinpedia

    Crypto Journalist and Editor of guest articles in CoinPedia. I am also handling Outreach & Partnerships Manager. Contact me: [email protected]

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