Some of the craziest returns of 5X, 10X, 50X, or even more are achieved by people who find new coins early on-chain and hold them as they explode in growth.
Here’s how you can start researching and finding these coins for yourself 👇🏼
Finding New Coins
There are a few key metrics to look at to determine how early you are to a coin:
-Market Cap:
This is the most important metric to check as it directly affects how much room for future growth a coin has. With new high risk / high reward coins, you are going to be looking for gains of multiple Xs.
If a coin is at a market cap of $500k then it can 20X and still only be at a market cap of $10M. However, if a coin is already at a market cap of $2M then reaching that same $10M market cap target would be a 5X.
What market cap range you look for when deciding whether to buy a coin or when to take profit depends on your personal view of the potential of the coin.
If you find a project with real utility in a sector of crypto with a lot of demand, or a project that offers improvements over existing products/services then you may aim for higher.
On the other hand, if you were just lucky to be early to a coin taking advantage of a short term source of hype then you may want to take profits on the way up rather than hold longer term.
-Liquidity:
Most new coins do not launch with significant liquidity. If you are working with less capital then this can actually be an advantage for you in some cases.
When a coin has lower liquidity, it means that large buys/sells will move price more. It also means that volatility will generally be greater as it takes less volume to move price significantly.
If a coin has real potential but low liquidity, then entering with a small amount can allow you to be early without suffering too much from slippage.
Then, if the coin takes off, liquidity can improve as more is added or it gets listed on more exchanges (centralized or decentralized) which can allow larger players to then buy as well.
-Holders:
You can check on-chain how many holders a coin has. Clearly, the lower the number of holders is, the earlier you are.
-Age:
You can also check on-chain to see when the smart contract for a coin was deployed and when it was first listed on a decentralized exchange to determine exactly how new a project is.
Strategy:
The easiest way to start scanning new coins and checking the characteristics I just covered is through DexScreener.
Very new coins won’t always be listed on CoinGecko or CoinMarketCap yet, but DexScreener lists coins as soon as they are added to a dex.
It also displays price, market cap, volume, liquidity, FDV, and other metrics to make it easy to decide which coins to give a deeper look.
You can also filter all the new coins by characteristics such as age, liquidity, what chain they are on, price change, and more.
There are a few reasons a coin may catch your attention: large number of trades being taken, large price increases, significant liquidity being added early on, or even just the name of the coin.
Regardless, once you see a coin you want to learn more about you can click on it to open the chart and see more details. Here’s what to check next:
-Name/Contract Address:
You can search the name and/or contract address of a coin on twitter and do a quick scan for any red flags or or positive signs.
Red flags would include credible information that the coin may be a scam/rug or that the team/dev is dumping early on.
Positive signs could include an active twitter page for the project, a community around it, or traders with strong track records following/mentioning it.
-Holders/Liquidity Providers:
If one or a few addresses hold a significant portion of a coin’s supply it is worth figuring out why.
One of the larger holders will usually be the liquidity pool for the dex, but it is also possible that a team/dev reserved a large portion of the tokens for themselves.
It is a good sign if the LP tokens for the pool and any team/dev allocations are locked at least for a fair period of time as this incentivizes them to grow the project and removes concerns about immediate dumping.
Another reason an address may hold a large portion of the supply is if they were extremely early or sniped the token launch to buy a lot of coins for very cheap.
If this is the case, they will almost always dump the tokens at some point. However, if the project has real potential then that dump could provide a good entry.
Risk Management:
It is absolutely essential to practice strong risk management when trading new coins. It is completely possible for a new coin to go to 0 and for your investment to end up worthless.
That is the risk you take in exchange for the potentially massive rewards. However, if you implement risk management procedures then you can lower that risk.
-Portfolio Allocation:
You should not be risking any amount you are not willing to lose on new coins. Even if a new coin does end up going 10X or more, it is very common for there to be corrections of -50% or more during that uptrend due to the extreme volatility of microcap coins.
If you are overinvested then these corrections could cause you to panic sell and miss out on the subsequent gains.
On the other hand, if you are comfortable with the amount you invested then you will be able to remain calm and hold through the volatility.
-Taking Profits:
So you did the research, found a promising coin early on, and have made some crazy returns … don’t be scared to take profits if the amount you made is significant to you personally.
It is very easy to see someone else on twitter making a 6 figure trade or holding a memecoin for 1000X and feel like your own gains are small in comparison.
Unfortunately, this has led to many people refusing to take profits and giving back life-changing profits.
Don’t let that happen to you. You can always take at least partial profits and continue holding some coins in case the uptrend continues.
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