6 Ways to Know If a Crypto Is Going to Take Off or Not

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The rapid pace and inherent volatility of the crypto market can make it daunting at first glance and warrants investors and traders to have a deeper understanding of market dynamics. At any given time there are a multitude of emerging digital assets fighting for the top spot though not all take off as expected. 

Therefore, it’s crucial to distinguish the winners and this requires a nuanced approach to analyzing coins. Here are six essential factors to take into consideration to achieve this objective.

1. Market Demand and Timing

Timing is a crucial aspect in determining which crypto might multiply its market price as there are periods that have markedly higher activity on newer coins. One such period is the altcoin season which typically follows a good Bitcoin performance stride. At this time, investors seek out other options to diversify their portfolios and adopt newer coins.

To isolate a potential top performer, you can then assess the presale performance of digital currencies you are interested in. Crypto expert Michael Graw highlights the importance of timing when determining which digital assets will be the next big crypto coins by illustrating Pepe’s meteoric growth. 

This coin grew exponentially throughout its presale offering period making it one of the most liked new entrants in the market. Understanding how this timeframe works before the official launch of digital assets is important in the long run for investors looking for the next crypto with great potential.

2. Technology and Innovation

Assessing the underlying technology powering each coin paints a clearer picture of its potential for success and longevity in the market. Newer coins tend to tackle issues that are posing a challenge to existing cryptocurrencies such as scalability, interoperability, and security. 

Carefully analyzing these aspects helps identify uniquely innovative solutions that have a demand in the market as opposed to investing blindly into a generic digital asset with no long-term viability. Most of this information can be found on the cryptocurrency’s whitepaper, which details the token’s blockchain ecosystem, alongside other important data like its digital architecture and design parameters.

Once you’ve gathered the information, comparing it side-by-side with existing crypto coins and other new entrants provides a high-level overview of where the market might go.

3. Regulatory Environment

The regulatory landscape of respective jurisdictions with enough power to sway market movements is also very important when trying to find a new crypto winner. For example, digital assets under scrutiny or ones that might undergo some compliance issues pose a risk to investors.

On the other hand, projects that are proactively addressing regulatory concerns by adhering to legal requirements might be on the path to long-term success. Furthermore, coins that have government or institutional support have a higher likelihood of being successful in the market than ones that don’t have such endorsements.

4. Market Sentiment and Trends

Influential figures on social media platforms have a significant impact on the success of new entrants within the crypto realm. The success of Dogecoin is an example of this fact since it can partly be attributed to Elon Musk’s sentiments that he openly shared online. After expressing his views about this digital asset, the market gravitated towards it which resulted in remarkable growth.

Staying in the loop on the latest market sentiments online and on traditional media streams will eliminate coins with less value and highlight ones with good potential. To supplement this analysis, you can also make use of market sentiment analysis tools that use AI to gather data and analyze how the market feels about certain digital assets.

5. Tokenomics and Supply

Tokenomics and supply provide valuable insights into current market dynamics regarding each coin’s economic model and supply mechanisms. As a result, investors can objectively evaluate its potential alongside other information gathered that has an impact on market price movements. 

An important aspect to take into consideration is the token distribution model. Before backing a digital asset, ensure that the token distribution is fair and transparent which upholds a cryptocurrency’s integrity by preventing it from being centralized. If the model is fair, it allows for equitable participation among investors, indicating long-term market feasibility.

In addition, the total supply and issuance schedule of digital currencies can make or break cryptocurrencies.  For example, if a coin has a capped supply or uses a deflationary model it will be scarcer than its counterparts. Ultimately, the scarcer coin typically holds higher value with investors holding them for longer periods of time.

6. Competitive Landscape

The crypto landscape is very competitive, and to find the best players with potential for taking off assessing the market as a collective can be helpful. Instead of focusing on a few coins, expanding research across the entire market to identify current challenges and possible solutions helps inform investors of what the market needs.

Digital currencies with higher market capitalization and trading volumes might not have the latitude to scale with the intention of resolving challenges facing the market. Subsequently, groundbreaking innovative solutions structure their entire ecosystems taking into consideration current bottlenecks which makes them more competitive by comparison. 

Be that as it may, you still need to understand the roadmaps of best-performing digital assets as they have the ability to dwarf newer entrants by coming up with more robust solutions. Therefore balancing the analysis of new projects with the current competitive landscape of the market is paramount to making a sound decision on which cryptocurrency to back.

Conclusion

Finding the next big digital currency is no easy feat, there is a lot of information that needs to be researched which might deter some investors. Unfortunately, this limits the potential of newer entrants that have uniquely innovative ecosystems that solve key challenges in the market. However, the use of research tools like market sentiment analysis tools can make this task easier.

Also, by focusing your research on these six factors, you can easily isolate winners with a higher potential for maximum reward. Most importantly, try to stay abreast with any market movements that pave the way for new opportunities and continue developing your understanding of market dynamics related to cryptocurrencies.