So the market has fallen. Some may be panicking, Some may see this as an opportunity to buy. Some may be on the sidelines waiting for this to play out. There may be coins you’ve kept on a watchlist trying to find an entry point.
Here’s some things I keep in mind while buying something. Hope it helps
1. Check where the crypto stands vis-a-vis their high
Let’s take an example here of a coin I tweeted about this morning – Oraichain. It’s something I’ve been seeing for a while, and am keen to start buying something here.
So a look at Coingecko tells me this
- Current price: $56
- All time high: $105 (fairly recent, 20th Feb)
So I’m currently getting this coin at a near 47% discount to its high. That’s nice. Ticks a box for me. At least for an initial purchase amount, assuming I plan to stagger or buy in parts. (So say, I want to invest $1000 in $ORAI, I will put in $500 now and wait with the rest – This is NOT advice. It’s just what I tend to do and is meant to give you an idea of how you can plan to invest. If you want to put all at one time, go ahead. Remember, its your money, your choice. You know best)
2. Compare the coin’s market cap (size) to that of the leaders in its field
So Oraichain is an oracle platform. If you’re unsure what an oracle is, I recently covered an oracle coin that explained the concept. Can be helpful. Anyways, coming back. I check where Orai stands vis-a-vis competition, especially the top players.
This page on Coingecko is really helpful here: https://www.coingecko.com/en/categories
So within this page I check the Oracle (ranked 11) option. If you have a look at that page, you will see it’s dominated by Chainlink with a market cap of over $11 billion. This is followed by UMA ($1.2 billion) and then there’s a big gap till Band Protocol ($296 million). Oraichain is somewhere in the middle of that list (Ranked 407 with a $40 million market cap).
To me this looks like an opportunity. I’ve not looked at detail fundamentals here. But at a size of $40 million, where the 3rd player on this list (which has loads of gaps) is at $296 million, I think Orai has some cool potential to move. Even a move to a market cap of $200 million is a 5 times from here.
3. Check the chart (Do this even if you’re not comfortable with technical analysis. I’ll tell you what to look here)
So I’m using a very simple chart here. Again taken from Coingecko. This is the price of ORAI since November. Ya it’s moved from a level of $3. Anyways, what do you make here. The price moved up and then hit $25 (around 30th Nov), then moved down a little. So let’s call $25 a resistance (this is Technical Analysis language. I’ve done a post on this briefly. Here’s something). Then it largely stayed below the $25 level till may be mid-January. It then moves up sharply almost touching the $50 level (another resistance). Then moves down and recently it crossed the $50 level and surged up to a $105 before coming down. What I know if $50 is a crucial level (again refer the article on technical analysis I linked earlier).
Remember: Resistance becomes Support and Support becomes Resistance in Technical Analysis.
So, to me the $50 is now a support level for Oraichain. Meaning, I expect it not to fall beyond that level. It can and there’s no “For Sure” in technicals. But it’s meant to act as a guide.
Summing up, I see a nice gradual upmove in Oraichain (which is always good) since it listed. It went up crazy recently and has now come down quite a bit. So I’m not buying at a high or when people are screaming BUYs. So a chart can give you a fair idea of where the coin stands.
Comparatively, so you know what I’m talking about, look at this chart. It’s of Phala – an absolutely amazing run up today. It moved from a 40 cents to over $1. Would I buy this. NO. If I wanted, I will wait here. So a chart will just show you these steep mountains where it can get easy to slip.
4. Do some research into the coin’s price movement
Coming back to ORAICHAIN. What made it fall so much. Yes, the entire market has fallen but this has fallen more.
So there’s a concept in investing: BUY THE RUMOR. SELL THE NEWS.
Let’s understand this with Oraichain. Have a look again at the chart for Oraichain. You see a run in February. Try and understand what’s making that happen. Look at the company’s twitter account (if you don’t want to go looking at the website). Is there some upcoming announcement, development or the likes. In this case, here’s a tweet from Oraichain from January 22
So. There was a launch of a Mainnet (for now, forget what that means) planned. So this is the “BUY THE RUMOR” part. You want to get into something ahead of a launch or buy when not many know of the launch. Obviously as you move closer to a launch, hype increases and people want to jump in. You see something called: FOMO (Fear Of Missing Out). So there would have been some who purchased ORAICHAIN at $105.
What happens next. SELL THE NEWS. The mainnet was launched and the price comes tumbling down (obviously again, markets have also corrected).
So ya. Do some research into why there’s been a sharp up move or down move before just jumping in. It’s not so hard.
5. Know at least some bit about the project
You do not need to be an expert here. But do some basic research into your investment. There are enough resources. I got to know about ORAICHAIN from a YouTuber called Sheldon Evans. This is one of his videos on it
- Know what the project is
- How involved the social media channels are (hype does matter in crypto. So you can have the best project but if there’s just 10 followers on Twitter, there’s a chance it will just go unseen)
- What’s the planned roadmap (launches, etc)
- How’s the team look (Check out my article on Quant. It talks briefly about why the team matters)
Ultimately, remember it’s your hard-earned money you putting on the line. There are obvious risks with cryptocurrencies, whatever anyone may say or scream their lungs out. You do not want to be caught with your pants down.
No one’s going to come to rescue your portfolio. So be smart. Do some of your own research. It’s not difficult. If there’s something that seems daunting, let me know in the comments below or just drop me a mail. Stay safe. Invest smart.