18/02/2023
Everyone always says "DYOR" - but how do you research crypto?
First, you have to understand your own investment strategy.
(and we reveal some killer research tools)
The truth is that your trading style will determine what kind of research you should do.
Broadly speaking, there are three main styles:
âłDay Trading
đSwing Trading
đŚLong-Term Investing
Day trading is the art of buying crypto and then selling it again on the same day. You might only hold for minutes, hours, or even seconds before cashing out.
The idea here is to profit from short-term price moves that come with volatility.
Your main concern is finding a coin experiencing drastic price movements and learning to capitalize on them.
In this instance, DYOR will refer more to understanding things like candlestick patterns and moving averages than what a coin is or does.
Swing trading is a middle ground between day trading and buy-and-hold investing.
The idea of swing trading is to capitalize on price swings that play out over a few days, weeks, or months.
So while chart reading and other technical analysis skills are helpful, youâre also going to want to know much more about the coin youâre investing in than a day trader would.
Long-term traders are in it for the long haul. Massive price swings? They donât care. Exchange meltdowns? No Fâs given.
Long-term trading involves knowing a coin so well that youâre willing to buy and hold it for years.
But, of course, if you go this route, youâll want to choose a coin you believe will only go up in value as the decades roll on.
This is where you need to DYOR AF when it comes to knowing a coin inside and out.
đĄ DYOR Crypto Essentials Questions đĄ
These are more for Swing + Long-term traders. But ask yourself these questions when studying whether to invest in a project or not.
What Does It Do?
Try to find the answers to questions like:
Is it a coin or a token?
What problem is it designed to solve?
Is it a value coin, utility token, or a layer 2 solution?
How does it solve the problem better than competitors?
Who Else Is Into It?
Throughout your research, youâll always want to learn as much as possible about the team behind a project.
Find out all you can about the founders, who they are, and whether they have the credentials to keep the project up and running long-term.
Itâs also important to remember that crypto prices donât move by themselves.
Look into what kind of following the coin has and how much trading volume it regularly pulls in.
Here are a few great resources that can help with this end of your research:
LunarCrush is an excellent tool for following crypto social influence and analytics
Santiment is another killer tool for up-to-date social and financial information.
Take a Look at Tokenomics
As plenty of meme coins have proven, social hype isnât everything. Ask critical financial questions before you jump on the latest bandwagon.
Tokenomics comes down to understanding a cryptoâs supply and demand.
Here are some questions that can give you great hints as to how much a coinâs price will respond over time:
Is there a supply cap?
How many coins will ever exist?
Is there a burn rate?
How many are already in circulation?
What % does the team hold?
When can the team sell?
đ¸ More Fun With Financials đ¸
When looking into investments, look at the market cap (the number of coins in circulation right now multiplied by the current price).
The higher the market cap, the higher the likelihood that the coin is already pretty well established.
Then, thereâs the coinâs historical chart, which is an easy way to check its price history.
Look at how well the price has fared over the past few days, weeks, and even years.
If youâre into day trading, youâll want to narrow your timeline to minutes or seconds.
Here are a few resources to help you DYOR.
Messari offers professional-grade research and charts to take your trades to the next level.
glassnode is a great resource for getting an inside peek at whatâs happening across different blockchains.
While everyoneâs DYOR tactics look a bit different, hopefully, this has given you a good idea of where to start. Donât be discouraged if you donât understand everything you come across when researching a coin.
The more research you do, the easier it will get.
Until then, use your instincts and remember that if something sounds too good to be true, it probably is.
