I’m sure we’ve all had this experience – peering at CoinmarketCap and thinking which one? Given the more than two thousand options – we have entered needle in a haystack territory. Deciding what crypto coins to watch can be a full-time task in and of itself.
However, before you even begin, there’s a learning process you would benefit greatly from undertaking. As an investor, you need to learn how to watch the cryptocurrency market and just as importantly how not to go about it. Chasing pumping tokens or trying to catch cliff diving coins are both going to diminish your capital.
How to Watch the Cryptocurrency Market?
What’s the point of watching it if you don’t have the tools to interpret what you see?
Above all things – educate yourself. Blearily scanning charts looking for ‘gold’ is entirely pointless if you don’t have the background knowledge to interpret the data before you.
This is going to take some time and require focusing on a number of related but nonetheless separate disciplines/areas:
- Chart Analysis
- Research Techniques
A Basic Understanding of the Underlying Technology
Photo by Federica Galli on Unsplash
Glaringly obvious, but the fact is the majority of people excitedly ‘discussing’ various cryptos to watch out for, have at best, a passing understanding of the underlying tech. Now, there’s absolutely no need to understand crypto at a code level but can you coherently define what a cryptocurrency is? Step one – learn the Basics of blockchain and cryptocurrency tech.
A Little Quiz:
Read the question, take a moment and then speak aloud for 30seconds to a minute on each. Did you feel you made sense? Be honest. If you aced it, great. If not – time for a bit of crypto basics study.
- What is a cryptocurrency?
- What is a blockchain?
- How is a blockchain different from a digital ledger?
- What is Proof of Work and how does it differ from Proof of Stake?
- What exactly is a digital wallet and how is it secured?
- How is a cryptocurrency like Bitcoin, for example, different to fiat?
- What is a 3rd generation blockchain? Name a first and a second?
- Are blockchain and cryptocurrencies the same? If not, why not?
The internet is awash with good resources but here are some I have used or created:
Ethos Knowledge Base – short, easily understood explanations of basic crypto concepts.
Cryptos Decrypted Website – Resource Section – a labour of love for my fellow crypto enthusiasts.
Chart analysis can be as complicated or as simple as you choose to make it. Again, there’s no need to go down the rabbit-hole of chart indicators, forecast systems and so on but you do need to have a basic understanding of a few key concepts.
Entry / Exit points
Volume – money flow
Moving Average – average of price over a certain span of time
Relative Strength Index (RSI) – a measure of the depth or ‘magnitude‘ of recent price action
Support/Resistance and how to identify such points
Appropriate time frame – why are you looking at the 4 hr chart when considering a multi-year investment?
I keep my charts clean but that’s just my personal preference. I focus on volume, the 200 week MA where possible and established previous market structure to guide my analysis. I also start at the highest possible time frame – work my way down and then zoom out again. You can learn to read a chart at a basic level very quickly but as in most endeavors, true mastery is the work of years of focus, reflection, and determination.
For examples of expert grade chart analysis in action checkout TIMM.
On Trybe, Workin2005 is a great resource for both up to date market analysis and learning the trade.
Photo by Dmitry Moraine on Unsplash
Learning to invest before you invest, is by far the most important criteria for success as an investor. Buy low sell high – done. Simple as pie. Perhaps it is but it is you the investor who is the weak link.
You’re subject to sorrow, fear, jealousy, anger, and inconsistency. That’s the real reason you should admit that you are not wise.
You Most Likely Are (As I Am Also) :
Greedy – to invest is to want more
Impatient – 5 years no problem – off to check the daily charts
Fearful of loss – down 5% today – I’ve ‘lost’ a lot of money
Fearful of exit – ok so I said I’d sell here but things are looking great
Untrustworthy – your word to yourself is largely worthless
Emotionally unsuited to long-term horizons – the markets been down for weeks! months!
Ill-informed – so this ‘guy’ said (insert crypto) is going to moon.
This is you, this is me. Long-term investment success (especially in a volatile market) requires a skill set that most of us do not possess. Don’t take offense – reflect, acknowledge and begin to equip yourself with the tools to combat the qualities that defeat the majority of would-be investors.
A more in-depth discussion of investment strategies and preparation can be found here.
Photo by Andrew Neel on Unsplash
Gee xyz looks hot.
Ethos – look it’s down 80% that’s gotta be an opportunity.
Someone on Telegram said EOS is going to explode.
We can’t go down forever.
Cardano is cheap – it’s only $0.04.
The cryptospace is awash with surface judgments, incompetent commentators, and widely held fallacies. To succeed as an investor you need to be able to separate yourself from the herd, manage risk, and possess the basic skills to assess the quality of the investment opportunity before you.
You have three choices:
- Learn to research.
- Pay some-one else to do it.
- Punt and most likely fail.
Surface judgments are little different to picking a racehorse by colour. Learning to do your own research doesn’t take long but adhering to the processes you now know of does. It’s time-comsuming to ‘look under the hood’ to examine tech, whitepapers, team composition, community metrics, coin tokenomics and so on but this is what ‘informed’ investing is. Time, focus, research, reflection, and finally capital. Skip any one step and the odds of a successful return on investment diminish. An in-depth discussion of research strategies is beyond the scope of this article but is explored in ‘How to Invest in Cryptocurrency‘.
Basic Understanding of Crypto Tech – check
Chart literate – check
Investing Strategies onboard – check
Research aware and committed – check
Ok, let’s checkout!
Cryptocurrencies to Watch out For
I take a simple two-tiered approach when looking for new cryptocurrencies to watch for or invest in:
- Established projects – already developed and deployed (which I separate into two categories Low Risk / Higher Risk).
- New to market – still in development.
I’ve already highlighted my top two cryptocurrencies to watch out for – Bitcoin and EOS in ‘What is the Next Big Cryptocurrency?‘.
Beyond these two (in my opinion) obvious choices. There are two other established projects that I’m currently looking into. Binance (BNB) and Icon (ICX). I already hold both cryptos but I’m in the process of evaluating whether to expand my position in both.
My my, that’s a pretty chart. The fundamentals are looking great for Binance. However, I’m not a buyer at these elevated levels.
We can clearly see that BNB has been on an uptrend for months. Who knows it may continue to do so but price likes to return to ‘the mean’. Even if Binance goes from strength to strength a correction in price is very likely. So, that’s my thesis. I’m interested but only if I don’t have to chase the price. Is it possible I’ll miss this current move entirely – yes, it is but that’s a risk I’m willing to take. In the long run, chasing price costs you money – a lot of it. So, I await Binance at my leisure. I’m looking to ladder my position in two buy zones and four entries one at the top and bottom of each zone.
The Price Supportive Fundamentals of Binance
- High volume exchange with a good reputation for security
- Binance Dex pending – BNB will be used when trading on the DEX
- Binance Labs – may establish BNB as an ICO port of call
- High-Profile Founder with a track record of achievement
- The chart tells the story – an out-performer over an extended span of time
Binance Dex may under-deliver. How decentralized will it really be?
Binance labs is full of promise – promise not an established record as a project incubator
The chart tells us there’s a lot to room to fall if the bear market gathers momentum
Review of Investment Thesis
Wait on a retrace.
Split buy order into 4 parts.
Minor investment (total 0.5% of my current portfolio if all four positions entered).
Exit – layered first exit -0.029 BTC (ambitious – review in 6 months)
I’ve held ICON since January 2018. I’ve since sold some but held on to the majority of my position.
We can clearly see this chart is nowhere near as bullish as Binance. However, in researching ‘The Crypto Asian Giants‘, article ICON came back to my attention.
Price Supportive Fundamentals of ICON (ICX)
Its dominant position within the world’s 11th biggest economy.
Significant partnership with Seoul Metropolitan Government.
The Korean market is more likely to adopt a homegrown network and currently, ICON is really only challenged by Qtum.
The scope of the domestic market is massive.
That’s an ugly chart.
ICON has not ‘out-performed’ the market during this downtrend.
It really hasn’t established a convincing bottom as yet.
Review of Investment Thesis
A single buy-in on retrace to 0.00062 BTC.
Lower conviction investment with commensurately lower investment position.
Exit – 0.00481 BTC (Just below 2018 May 18th high)
An excellent introduction to ICON can be watched here.
A recent addition to my portfolio and a coin I’m interested in picking up a little more of. My interest in Holochain stems from my research for a recent article Holochain Examined.
Another coin outperforming the market in recent months. Holochain is now in the midst of a correction. I bought my first position at 0.0000027 BTC. Price has since continued to decline.
Price Supportive Fundamentals of Holochain (HOT)
Strong out-performer in the bear market.
A team with over a decade of experience in modeling digital currencies.
A likely niche, as Holo Ports are powerful and decentralized (appealing to a significant number of crypto enthusiasts).
Hard to understand – may hamper broader investment.
Hosting of decentralized applications is an incredibly competitive sector of the crypto market.
Price has already ‘pumped’.
Review of Investment Thesis
Enter on retrace to 0.0000018 BTC.
Lower conviction investment – commensurately lower investment position.
Exit – to be decided. For now – 0.00001 BTC. Review in the coming months (end of July)
New Coins to Watch
The coins I’m about to list are new to market and still being researched. I haven’t formed a position about them yet beyond that they are coins to watch for over and above their stablemates.
Bitcoin code with privacy features and greater in-built scale. A lot of hype behind this before launch. Excess supply for years to come so pressure on price is likely to a key limiting factor in ROI (Return on Investment). Still, the research I’ve so far conducted has led me to be intrigued. On my ‘coins to watch’ list. Won’t touch this until it establishes a bottom and retests the bottom.
This project sold out in a matter of hours. It touts it’s self as a combination of blockchain and artificial intelligence and was launched through Binance Labs. Ambitious but aren’t they all? At the very early stages of looking at this one but the chart clearly offers guidance – wait! Again, not touching this one until is display some price resilience. That’s going to take a few months to prove.
At a later date, I intend to discuss each of these cryptos which comprise a significant portion of my portfolio at a later date. Watch this spot!
Cardano – Protocol competitor with a lot going for it.
Neo – Rough year lost a lot of value but still showing potential with a pivot to gaming.
Nuls- Interoperability/plug-in focus may yield benefits (or not).
Elastos – hugely ambitious/deep project – lots of potential – many years of dev ahead.
Please note all of the above is entirely subjective and a reflection of my own long-held bias much as I might want to overlook that. Verify don’t trust. Do your own research! Above all take your time – you’ll get there a lot faster through a process of reflection and skepticism than you will be jumping at every ‘bright light’ and’ hopeful’ message.
I hope this short tour through my current thoughts on cryptos to watch was of some interest. As always, looking forward to your comments.
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