Alt-coinsInvesting

Ready For The Next Crypto-Boom? – How To Research Altcoins

By April 2, 2018 No Comments
Most people buy and sell cryptocurrency with no clue about the purpose or value of the underlying asset. So now, while the markets are down, taking a few minutes to do a little research can put you near in the top percentile of knowledgeable crypto investors, and pay off big-time in the next crypto-boom, which, face it, you know is coming.

Most people buy and sell cryptocurrency with no clue as to the purpose or value of the underlying asset. So now, while the markets are down, taking a few minutes to do a little research can put you in the top percentile of knowledgeable crypto investors, and pay off big-time in the next crypto-boom, which, face it, you know is coming.

How To Pick One Coin Out Of 1600

In a universe of more than 1,600 coins, where do you even start?  Instead of working from the biggest-font all-caps tip on reddit or twitter, try using a little quantitative analysis to get a jump on which currencies are seeing an unusual level of action.

As a general rule, a coin’s 24-hour US dollar trading volume should rank in roughly the same order as its market-cap.  The ones that are out-of-sync with their market capitalization tell you where the current trading action is happening.  

Looking For Quantitative Anomalies

A great tool for doing this is livecoinwatch.com, which will allow you to sort coins based on 24-hour dollar volume while keeping their market-cap rank visible.  The ones that pop out of order are where the action is.  Those are the ones you should investigate further.  

In the example below Tron, Ethereum classic, and Quantum are ranked 14, 16, & 19 in market cap, yet they made the top 10 by dollar-volume - this quantitative anomaly should get you asking why.

An easy way to spot quantitative anomalies where a crypto's US dollar volume has jumped ahead of its market cap is to sort by dollar volume with the market cap rankings still visible - the coins wihere the action is will jump right out.

An easy way to spot quantitative anomalies where a crypto's US dollar volume has jumped ahead of its market cap is to sort by dollar volume with the market cap rankings still visible - the coins where the action is will pop right out.

Construct A Mental Snapshot

The cool thing about livecoinwatch is that it allows you to put several tiny thumbnail charts in a spreadsheet for side-by-side analysis on the same screen.  This is crucial when trying to make sense of the crypto-zoo by constructing a single unified mental snapshot of the trend of different cryptocurrencies in multiple time frames.

What we’re looking for is a crypto with a clear long term trend or a trend reversal.  In the example below, TRON shows a 3-month downtrend while the monthly trend has recently turned upward, so it meets our criteria for further investigation.

When you have a spreadsheet with side-by-side thumbnail charts in different timeframes it's easy to spot trend changes. The 3-month trend for TRON (far right column) is down but the 1-month (middle column) looks like it's turning upward.

When you have a spreadsheet with side-by-side thumbnail charts in different timeframes it's easy to spot trend changes. The 3-month trend for TRON (far right column) is down but the 1-month trend (middle column) looks like it's turning upward.

Reason and Quantitative Analysis

Now that you’ve utilized reason and quantitative analysis to identify the rabbit hole you want to dive into, you’ll feel a lot more self-assured than if you just followed the first screaming huge-font all-caps comment you spotted about crypto that morning.

Unfiltered Access

Another great feature of livecoinwatch is that when you click on the coin name, you get taken to a page that has the main reddit thread and twitter feed embedded.  You’ll find lots of great links all in one place, plus comment threads that will quickly bring you up to speed on what’s happening with this cryptocurrency.  Since these tweets and threads are coming from disparate sources, you can be relatively assured that they're not curated to sell you something but represent unfiltered access to what people are actually thinking and saying about the crypto you're investigating.

Transforming Yourself Into A Crypto-Ninja

Now when your friends ask you what’s happening in the crypto markets you can answer like a quantitative investment ninja:

Well, I was just reading the latest reddit threads on a coin whose monthly chart is showing a likely trend change and whose current dollar-volume is ranked 11 spots higher than its market cap…

You, transformed into a Crypto-Ninja

Reddit threads and twitter feeds are embedded right into the coin info page on livecoinwatch so you can head down the rabbit hole you chose with quantitative analysis in a single click.

Reddit threads and twitter feeds are embedded right into the coin info page on livecoinwatch so you can head down the rabbit hole you chose with quantitative analysis in a single click.



Images via Shutterstock Charts via livecoinwatch.com

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