Experts revealed the principles of a trading strategy that allows you to earn income from promising and developing cryptocurrency projects
Bitcoin has been falling in price for more than two months. The cryptocurrency exchange rate began to decline after it updated its historical high above $69,000 in early November 2021. On January 24, the value of the asset fell to $32.9 thousand for the first time since July last year. On January 28, Bitcoin is traded at $36.8 thousand, and its capitalization is $716 billion, according to CoinGecko.
Against the backdrop of a decline in bitcoin, altcoins also fell significantly. For example, Ethereum is currently trading at $2.49K (down 49% from all-time high), Binance Coin is $384 (down 44% from all-time high), and Cardano is $1 (67% down from all-time high).
-How to find undervalued Altcoin projects with prospects for further growth in the face of a declining market.
Whole trading strategy
First of all, you need to study all the factors that guide investors, recommended an objective assessment of the reputation of the development team and the target audience of the project.
“Ideally, this should not be an already existing niche in which the founders of the project want to introduce digitalization / blockchain / NFT, etc. This should be a new niche that the project itself creates around itself,”
Apply a deeper price analysis to the token, which may indicate that it is not undervalued:
- Growth below market average in 2021;
- Growth below the historical high reached in 2017-2018;
- Significant growth in user base/liquidity without a similar increase in the rate.
“Undervaluation is a set of growth factors for technical and user indicators in relation to the growth rate of the coin over the same period,”
Easy option
The easiest way to make money on undervalued tokens is to search for large projects that have fallen in price more than the average market over the past two or three weeks, take into account the fundamental potential and major expected events that could increase the value of the altcoin in the future.
“The Relative Strength Index (RSI) will be useful, when the token reaches extremely low values, there is a very high chance to start a corrective upward movement,”
First of all, you need to pay attention to those projects that have been working for more than a year and have their own flow of customers, recommended , development may be more important than exchange speculation, so the cost of their tokens will be underestimated.
When projects start promoting the asset and integrating it with larger market participants, the price of the token can skyrocket.
Tips when looking for undervalued tokens
- It is necessary to buy tokens only at the moment when mass panic sales occur on the market;
- Do not buy tokens when it seems that a reversal has occurred and the asset should start to rise in price. At such moments, it is necessary to take into account only technical analysis, focus on trading volumes and positions in the order book;
- You should not join the “pumps”, the best periods for buying are the moments of “lateral” movement at a key level after an increase or decrease, depending on the overall picture of the market;
- The best strategy is not to try to beat the market and buy in equal shares at regular intervals, which will allow you to evenly distribute the price of entry into the asset;
- Divide the working volume into several parts and always leave a part of the deposit free so that you can average out a bad entry.
