Successful cryptocurrency investing: knowledge is power
When it comes to cryptocurrencies, the first names that come to mind are the “blue chips” of the crypto world — Bitcoin or Ethereum. However, in the shadow of these giants, lesser-known altcoins hide, with the potential to become the next big stars of the market. It’s worth noting that lesser-known altcoins, with a “penny price today and a several-hundred-percent increase tomorrow,” require deep analysis and patience. This is a field for bold and far-sighted investors.
To understand how an unknown cryptocurrency can reach a significant market share, it's important to explore various influencing factors: from technology and the team to marketing and investors. Let’s examine these aspects in detail and analyze their significance.
1. Technology and Team: 10%
This may seem like a low figure, but for short-term market dynamics, it's often more important how the project is presented and the “buzz” around it than its technical specifications. The presence of well-known and proven professionals on the team strengthens investors' confidence that the project can solve potential problems and ensure further development. Nevertheless, for long-term sustainability and growth, this percentage will increase when the project faces real challenges.
2. Marketing: 45% (hype and popularization)
Successful projects almost always have strong marketing campaigns. Bright examples are Dogecoin and Shiba Inu. These projects initially didn’t have unique technologies, but widespread information dissemination on social media created massive demand for these coins. Shiba Inu: In May 2021, SHIB rose by more than 4,000% between early 2021 and mid-May 2021, which was the result of an exceptionally strong marketing strategy and attention from retail investors. The technology or the team didn’t play a key role in its success. Dogecoin: Despite its initial insignificance, strong marketing and celebrity endorsements made it famous. Dogecoin was originally created as a joke, but thanks to the active support of personalities like Elon Musk, it gained enormous popularity. The marketing and hype around DOGE became the key factors in its market success, highlighting that sometimes even projects without significant technological innovation can achieve success through strong promotion.
This phenomenon demonstrates that marketing in the world of cryptocurrencies can have a huge impact on the price and popularity of a coin, sometimes even more than its technological foundation.
3. Investors: 45%
The influence of investors on the success of cryptocurrencies can vary, but typically their role is estimated at around 45%. This is because active investors not only provide liquidity in the market but also can shape demand and price trends through their buying and selling decisions. The more interest there is in a particular cryptocurrency, the higher its value. They also support projects by providing stability and additional resources, which can help develop technologies and expand the ecosystem. Moreover, the presence of large investors can boost trust in the cryptocurrency, attracting new investors.
Thus, choosing coins that have the backing of large investors can be a strategic step to reduce risks in the highly volatile cryptocurrency market.
The above information can be useful for several reasons:
- Strategic planning: Understanding which aspects (marketing, technology, team, investments) are most important for success can help you develop an investment strategy. You can focus on the key elements that can lead to success.
- Project evaluation: This information will help you analyze current and new cryptocurrencies. For example, if a project has a weak technological base but a strong team and marketing, you can make more informed investment decisions.
- Risk avoidance: Understanding that a project’s success doesn’t depend solely on technology can protect you from investing in “crypto startups” that lack strong marketing or investor support.
- Market awareness: Knowing the factors that influence a cryptocurrency’s success will allow you to better navigate market trends, news, and changes. You’ll be able to track projects that actively attract investor attention or run successful marketing campaigns.
Conclusion
Successful investing in cryptocurrency isn’t just a game of luck. Understanding the significance of various factors that influence the success of a crypto coin allows investors to make more informed choices. Focusing on marketing and attracting investors, even in the absence of perfect technology, can lead to successful investments. Remember that the cryptocurrency market changes very quickly, and knowledge is your main ally in this exciting game.
