The most famous – investor Warren Buffett built his dizzying career primarily on finding undervalued companies and then buying them up. Even his parent company, Berkshire Hathaway Inc., which runs many companies, was bought at the start of his career.
Today we will talk about the opportunity to make money on undervalued coins, is it possible to repeat the success of Warren Buffett. Let’s take a closer look at the ways, the possibilities of this type of earnings!
Main reasons
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 26, Bitcoin is traded at $37.7 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). )
It can be concluded that for the most part the altcoin market depends on the price and quotes of bitcoin. When bitcoin grows, the entire crypto market grows. This is due to many factors, but the main one is that bitcoin is the progenitor of cryptocurrency.
Factors that guide investors
First of all, you need to study all the factors that guide investors, explained Nikita Soshnikov, director of the Alfacash cryptocurrency exchange service. And in this regard, he recommended an objective assessment of the reputation of the development team and the target audience of the project.
«В идеале — это не должна быть уже существующая ниша, в которую основатели проекта хотят внедрить цифровизацию/блокчейн/NFT и т.д. Это должна быть новая ниша, которую проект сам создает вокруг себя», — отметил эксперт.
Then Soshnikov advised to 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 a coin over the same period,” Soshnikov explained.
Option for everyone
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, explained Nikita Zuborev, senior analyst at Bestchange.ru. He also advised to take into account the fundamental potential and major expected events that could increase the value of the altcoin in the future.
“If we consider technical analysis metrics, then 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,” the analyst noted.
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 Cryptorg CEO Andrey Podolyan. According to him, for some of these projects, 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, Podolyan explained.
Tips for Finding Undervalued Tokens
- It is necessary to buy tokens only at the moment when mass panic sales occur on the market, Zuborev believes;
- 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, Zuborev advises;
- 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, Zuborev added;
- 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, Soshnikov argues;
- Divide the working volume into several parts and always leave a part of the deposit free so that it is possible to average out a bad entry, recommends Podolyan.
Conclusion
Here you have learned another way to make money in cryptocurrency, if you have carefully studied all the points for work, then you can start now. It does not need a huge start-up capital, $ 100 will do for a start.
To begin with, the main thing is to fill your hand and understand the scheme of work, draw up your own strategy and much more. The main thing is not to stay on the achieved and go only forward.
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