makingcryptoeasy101
What gives a crypto its value? What impacts how a cryptocurrency moves? How can you predict which crypto coin to buy?
What does the project, the coin which you purchased, do? What is its purpose? How innovative is it in what it’s doing? How easily can that business be replicated.
Think of Binance. It’s now established itself as probably the biggest exchange in the world. It’s got loads of currencies to trade on. Yes, for sure there are many exchanges, regional and international. But building a scale of the nature Binance has is going to be extremely challenging for any of those.
So. The utility of your coin is a big big differentiator. It can drive value or completely erode value.
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When demand is greater than supply? Or more people are looking to buy apartments compared to what’s available, prices for apartments go up? Remember what happened with toilet paper at the beginning of the pandemic?
So ya. More the demand for a project, more the keenness to buy the coin. That drives up price.
Tip: A limited supply for a coin can often be a trigger point for driving demand.
Day to day value, ups and downs, are derived from supply and demand dynamics in the market.
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That’s hype. Hype can be a “razor’s edge to thread”. So there are negatives and positives to it. But for a project, it is essential to an extent. How do you check that?
Check the social following of the project
See if influencers are talking about it
A cool tip I follow: Search for your project on Twitter. So I’ll search for may be $ORAI on Twitter, and see the Top and Latest tweets to get a sense of hype around it. Community plays a big role in crypto.
You can have the coin to the best of projects. But if it’s not seen, chances are the fundamentals (or amazing stuff about it) will get lost in the crypto world. Price will not follow those fundamentals.
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General market sentiment influences price of individual coins big time. When the sentiment is bullish (optimistic), most of the coins will rise. When it’s bearish (pessimistic), most of the coins will fall. So how do you figure out sentiment:
Track Bitcoin. Look at it as a kind of benchmark. I made a reference to Bitcoin as the Sun in the universe in that post.
Keep a general tab on current affairs in this space. Check out the page dedicated to Bitcoin on say CNBC.
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Keep a watch on something called a roadmap for your project. If I don’t find one on the website for the coin I have, that’s a bit of a red flag for me. I’m keen to see developments in the future.
Generally project launches, developments influence price in a positive way (at least as long as you're in a good project). Keep a tab on what's happening within the coin you hold and see what are the trigger points in the coming weeks or months that can drive prices up.
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