What Qualifies As A Good Crypto investment?

Qualification Is Not What It Use To Be

If you asked someone this question during previous cycles you were likely to get a very standard and simple answer. The typical answer was: If it solves a problem and has a relatively strong community, it’s pretty much good to go. This viewpoint is still relevant. However, the list of qualifying criteria has grown somewhat since the early days.

Securing success in the altcoin market is becoming increasingly more difficult, largely due to both the direct and indirect consequences of adoption and growth. When money begins to move it attracts the attention of the regulators. It, unfortunately, also attracts the attention of scammers and other undesirables.

Opportunists and “fly by nights” flood the market with a very clear objective. In essence, they purposely aim to extract value without providing any value. Roadmaps can simply be the product of an overactive criminal imagination. If you pay attention, you will note the following: There are many who talk a good game, but their actions speak otherwise.

What Have They Accomplished?

Accomplishment is evidence of actual work and development. Has a particular project reached any meaningful milestones, or is it simply promoting a promise that always sees the goalposts being moved? This is an important question to ask yourself when considering any project. Is there evidence of measurable progression?

This is a “sign of life” and simultaneously displays that developers and team members are still passionate about the project and its future. Stagnation, on the other hand, is an issue, regardless of the problem that is potentially “being solved”. A good idea with no action remains just a good idea.

It is often suggested that bear markets are a good time to build. A relatively good health assessment is to identify what has been achieved since the last bear market. Has there been development and growth that has actually enhanced or changed the user experience? Furthermore, has it been embraced by the community and market at large?

Holding Its Own

Cardano remains a project that I am interested in, especially at these prices. Regardless of much still being in the pipeline, the project has managed to regain its spot in the Top 10. A project that can remain within the Top 10 for two consecutive cycles is a project worth noting. This is another aspect worth noting.

Yes, market cap valuations drop considerably in a bear market, but does a project maintain its ranking? Some projects even move higher up the ranking as other projects crash and burn. This is yet another positive sign of life, which is encouraging when considering future prospects.

On-Chain Activity

This is also extremely important, as it provides insight into the true demand and adoption of the particular blockchain in question. In regard to DeFi projects, TVL (Total Value Locked) is another crucial point of examination. All of these metrics measure demand, which is an integral part of any blockchain’s success.

Another warning sign for me in relation to Solana is that the TVL has not increased alongside the recent price appreciation. I still maintain a relatively positive view of Solana. As recorded in an earlier article, I was happy to continue very modest accumulation as prices dropped. This was accompanied by a short position. In other words, my viewpoint was converted into a strategy.

Being fairly optimistic long-term, I was happy to continue very modest accumulation. However, understanding the immediate situation, I went short in a trade. Two “contrary” strategic approaches or so it would appear. Not actually, using price depreciation for long-term accumulation, while simultaneously shorting for short-term profits.

These profits can then be used as long-term capital if so desired. Recent price action has affirmed this strategy rather well. However, I would think that the lows get retested. The TVL is providing confluence to support this idea.

Final Thoughts

At the end of the day, identifying a future investment requires a significant amount of research. An investor also needs to ask the difficult questions… and then proceed to allow the data to answer them outside of a predetermined bias. A lot of people utilize data in a similar way to how they trade… they simply distort anything that contradicts their view until it fits their narrative.

This is a complete waste of time. Refusing to acknowledge the facts defeats the endeavor of seeking them out. Now is definitely the time to begin identifying your investment choices for the next bull market. All the best as you go about making your selection.

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