It is important to concentrate your attention on just a few projects. A good portfolio whether you are trading stocks, resources or cryptocurrencies consists of only a few positions. A good portfolio is checked and maintained regularly like a sports car (e.g a Lambo). It is versatile and balanced, which means that you should not only invest in just one kind of asset. We want to concentrate here on how to find crypto projects that are worth investing in.
<h3>Set a fundamental, measurable and easily researchable limit</h3>>
Experienced traders set lines for possible investments to focus on a few relevant companies, projects – or cryptocurrencies. These lines are often arbitrary but they give you the advantage to restrict your time and research to investments that likely have a higher chance for future success and profit as they are simply bigger. Bigger projects are more likely to be transparent.
There is much information about these crypto projects and the responsible foundation, institution and persons are kind of pressured to deliver information and progress to their respective investors or communities. A data point that makes sense in stock markets as well as in the crypto market is the market cap.
<h3>A good rule of thumb in both bear and bull markets</h3>
Last year, a good rule of thumb was to see only cryptocurrency projects as relevant that have a higher market cap than $500,000,000 USD. It allowed you to focus on 25 projects instead of an innumerable amount of coins and tokens. It’s still quite hard to follow 25 projects, especially as there are obviously exceptions. But if you throw out some of those 25 projects for other reasons, you can concentrate on really just a few ones that you find compelling for other reasons.
This approach delivers a basis from which you can start your research. But the best thing about this rule is, that it still applies to the market after more than 9 months of bearish price action, with a similar result. Currently, there are only 21 cryptocurrencies with a market cap above $500,000,000 USD. Of course, this concept needs adjustment, e.g. it is likely that the coin market cap in 10 years for cryptocurrencies will not stay on the same level.
<h3>Just a fundament for further research</h3>
This advice gives you just a fundament for further research. While you eliminate the chance this way of finding and investing in that one little project that will eventually become huge, you can right on concentrate on the existing projects that have a much higher probability of finding mass-adoption in the long run.
After this step, you should research now are the major characteristics of the biggest coins. What does the project want to achieve? Which differences are there between Proof of Work/Stake? What is off/on-chain scaling? What are DApps? And of course always research the teams, developers and the partners of a project. Do not rush things, just starting to understand all these things will likely take weeks if not months.