Mastering Crypto Investment: Your Ultimate Guide to Smart and Profitable Digital Asset Strategies
A STEP-BY-STEP GUIDE TO ANALYZING DIGITAL ASSETS
Welcome to "Mastering Crypto Investment," a comprehensive guide designed to empower you with the knowledge and tools needed to navigate the dynamic world of cryptocurrencies. In this book, we will explore the sophisticated methods and strategies used by seasoned investors to identify promising digital assets and make informed investment decisions.
Cryptocurrencies have transformed the landscape of finance, offering new opportunities for growth and innovation. However, with thousands of digital assets available, knowing where to invest can be daunting. This guide simplifies the process by focusing on a critical aspect of cryptocurrency investment: whale analysis. Whalesโlarge investors or entities with significant holdingsโcan dramatically influence market movements and uncover valuable insights into potential investments.
We will delve into various tools and platforms to help you track and analyze whale activities
Before we begin, let me introduce myself. My name is kizoki_Yz, and I am a content creator on Binance Square, where I share my ideas, trades, and the latest news daily and for free. My account is verified by Binance, and I currently have 34,000 followers. I invite you to visit my Binance Square account to stay updated with the latest information and developments in the cryptocurrency world. I apologize for the lengthy introduction and any inconvenience, and now, letโs get started.
Link social media ๐ https://linktr.ee/kizoki_yz
Table of Contents:
โซ๏ธFundamentals of Cryptocurrencies and Economic Cycles
1/ Introduction to Cryptocurrencies for Beginners
2/ New Sectors and Problems Solved by Cryptocurrencies
3/ Types of Cryptocurrencies and What Distinguishes Each
4/ How Does the Economy Affect the Cryptocurrency Market?
5/ Economic Cycles in the Cryptocurrency Market
6/ Risks and Warnings
โซ๏ธHow to Use CoinMarketCap Professionally: Step by Step
1/ Selecting the Right Sector
2/ Analyzing the Cryptocurrency
3/ Reviewing Project Information
4/ Evaluating Listed Exchanges
5/ Assessing Social Media Activity
โซ๏ธHow to Use CryptoRank to Enhance Your Project Analysis
1/ Accessing CryptoRank and Searching for the Token
2/ Exploring the Overview Section
3/ Exploring the Funds and Backers Section
4/ Additional Steps: Exploring and Classifying Funds
โซ๏ธAnalyzing DeFi Projects with DefiLlama
1/ Accessing DeFi Llama and Searching For Projects
2/ Analyzing the Total Value Locked (TVL) and Its Distribution Among Protocols
3/ Conclusions on the Strength and Stability of the Projects
โซ๏ธHow to Use Unlock Token to Analyze Cryptocurrency Inflation
1/ Basic Cryptocurrency Information
2/ Emission Details and Inflation Calculations
โซ๏ธAssessing Security with Certik Skynet
1/ Understanding Blockchain Security
2/ Using Certik to Assess Risk
Whether you're a novice or an experienced investor, this guide aims to enhance your understanding of digital asset analysis and optimize your investment strategy. Get ready to unlock the potential of cryptocurrency investments and master the art of identifying high-value opportunities in this exciting market.
Letโs embark on this journey to better investment decisions together.
Chapter 1: Fundamentals of Cryptocurrencies and Economic Cycles
1. Introduction to Cryptocurrencies for Beginners:
What are Cryptocurrencies? Cryptocurrencies are digital assets that function as a medium of exchange, relying on cryptography to secure transactions and control the creation of new units. Bitcoin is the first cryptocurrency to have been introduced to the world.When Did Cryptocurrencies Emerge and Who is the Founder? Bitcoin was introduced in 2009 as the first cryptocurrency, created by a mysterious individual or group using the pseudonym "Satoshi Nakamoto." The primary goal of Bitcoin was to create a decentralized financial system that allows peer-to-peer transactions without the need for financial intermediaries like banks.A Simplified Explanation of Blockchain Technology: Blockchain technology is the foundational technology that underpins most cryptocurrencies. It is a chain of encrypted blocks, where transactions are recorded on each block and distributed across a network of computers globally. This ensures transparency and security, as data cannot be altered once it is recorded.
2. New Sectors and Problems Solved by Cryptocurrencies:
The Financial Sector: Cryptocurrencies offer solutions to traditional issues such as high fees and delays in international transactions. Blockchain technology provides fast, secure transactions at lower costs, helping to reduce reliance on traditional banks.The Real Estate Sector: Through tokenization, investors can purchase fractions of real estate, making real estate investment more accessible and straightforward.Decentralized Finance (DeFi): DeFi represents an alternative to traditional banking, allowing users to lend, borrow, or trade assets without intermediaries. DeFi opens access to financial services for everyone without the need for traditional verification processes.Smart Contracts: Smart contracts enable transactions to be automatically executed once specific conditions are met, reducing the need for intermediaries and increasing transparency. These contracts play a significant role in areas such as law and e-commerce.Practical Examples: For instance, Ripple (XRP) works to expedite international bank transactions, positioning itself as a strong competitor to the traditional banking system.
3. Types of Cryptocurrencies and What Distinguishes Each:
Traditional Cryptocurrencies (e.g., Bitcoin BTC): These aim to be alternatives to traditional money and are used as a medium of exchange. Bitcoin is the most well-known example and is often referred to as "digital gold" due to its increasing value and widespread acceptance.Smart Contract-Based Cryptocurrencies (e.g., Ethereum ETH): These enable the execution of smart contracts and decentralized applications (dApps) on their network. Ethereum is more than just a cryptocurrency; it is a platform for innovating new applications on the blockchain.Stablecoins: Cryptocurrencies like USDT are pegged to a stable asset like the US dollar, making them less volatile and ideal for daily transactions or as a safe haven.Security Tokens: These represent financial assets like stocks and provide digital ownership rights. Security tokens are more regulated and subject to securities laws.Non-Fungible Tokens (NFTs): NFTs represent unique digital assets, such as digital art or virtual real estate. Unlike traditional cryptocurrencies, each NFT has a unique value and cannot be exchanged for another.
4. How Does the Economy Affect the Cryptocurrency Market?
Monetary Policies and Interest Rates: Central banks' decisions regarding interest rates influence the flow of investments toward cryptocurrencies. When interest rates are low, investment in high-yield assets like cryptocurrencies increases, leading to a rise in prices.Inflation: Rising inflation drives investors toward cryptocurrencies as a safe haven, leading to higher prices. In countries experiencing severe inflation, such as Venezuela, cryptocurrencies have become a real alternative to local currencies.Government Regulations: Government laws and regulations surrounding cryptocurrencies can either stimulate or stifle the market, directly affecting prices. For example, China's announcement of a mining ban led to a significant drop in Bitcoin prices.The Role of Media and Public Sentiment: News, media reports, and rumors have a strong impact on the cryptocurrency market. A single tweet from an influential figure like Elon Musk can cause significant market fluctuations.
5. Economic Cycles in the Cryptocurrency Market:
Economic Cycles: Like any other financial market, the cryptocurrency market goes through economic cycles, including bull markets and bear markets.Bull Market: Characterized by a continuous rise in cryptocurrency prices, this is the ideal time to sell to maximize profits. Bull markets are usually accompanied by widespread optimism and an increase in new investments.Bear Market: Characterized by falling prices, this provides an opportunity to buy at lower prices before the next bull market. While bear markets may be concerning for new investors, they offer significant buying opportunities at discounted prices.Strategies for Positioning in Bear Markets and Selling in Bull Markets:
Buying in Bear Markets: When prices decline, investors can take advantage of the opportunity to buy at discounted prices.Selling in Bull Markets: When prices start to rise again, significant profits can be made by selling during the bull market.
6. Risks and Warnings
High Volatility: The cryptocurrency market is known for its sharp fluctuations, meaning prices can rise or fall dramatically in a short period.Cyber Attacks: Cryptocurrency wallets and platforms may be vulnerable to cyberattacks, making it essential to secure your investments properly.Guidelines for New Investors: It is advisable to start with small amounts, diversify investments across multiple assets, and never invest more than you can afford to lose.
This chapter is now comprehensive and covers the essential aspects of understanding cryptocurrencies and their relationship with the economy, along with practical advice for new investors.
Chapter 2: How to Use CoinMarketCap Professionally Step by Step
1. Identify the Relevant Sector
When you enter CoinMarketCap, you'll find a list of categories featuring different sectors such as AI, Gaming, and Solana Ecosystem. You can select a sector that interests you, such as "Gaming," and review the cryptocurrencies listed under that category. For stronger project evaluation, it is advisable to focus on cryptocurrencies that are within the Top 100.
2. Analyze the Cryptocurrency
When selecting a specific cryptocurrency like EGLD (MultiversX), consider the following points:
Current Market Cap:Low Market Cap: May indicate that the cryptocurrency is new or not yet well-known. Exercise caution as it could be subject to significant volatility.High Market Cap: May reflect stability and strength of the project, but it is crucial to verify the projectโs quality beyond just the market cap.Circulation Supply, Total Supply, Max Supply, and Fully Diluted Market Cap:Circulation Supply: Number of coins currently in circulation.Total Supply: Total number of coins available, which may include coins that are not yet in circulation.Max Supply: Maximum number of coins that can ever exist. If there is no maximum supply, it could lead to additional coins being minted in the future, affecting the coinโs value.Fully Diluted Market Cap: Market cap if all possible coins were issued. A maximum supply is a positive feature as it limits inflation.Verification Badge:Indicates that the project has been verified by CoinMarketCap, enhancing its credibility.
3. Review Project Information (About)
Go to the "About" section to read comprehensive information about the project. This section should include details on what the project offers, its uses, and its goals. Understanding this information will help you gauge whether the project is worth investing in.
4. Analyze the Listed Exchanges (Market)
Navigate to the "Market" section to check the exchanges where the cryptocurrency is listed. Ensure the cryptocurrency is available on major exchanges such as:
BinanceCoinbaseBybitKrakenGate.ioKuCoinMEXCBitgetUpbitHTXBitfinex
If the Confidence Indicator is high on all these platforms, it suggests that the project has high quality and trust.
5. Analyze Social Media Activity (Social Media)
Go to the "Social Media" section and review the activity on Twitter. Many projects announce and share updates on Twitter. Check:
Activity Level and Engagement: Strong projects are typically active and engaged on Twitter.Number of Followers: The number of followers is another indicator of the project's popularity.
Additionally, visit the projectโs official website to see their work and updates directly. This can provide more insights into their operations and recent developments.
We will detail how to assess Twitter activity in a later chapter of the book.
Case Study: EGLD (MultiversX)
Let's analyze the EGLD project using the available data:
Market Cap: $732,412,841Indicates a large market size, suggesting relative stability in the market.Circulation Supply: 27,225,245 coinsNumber of coins currently in circulation.Total Supply: 27,310,798 coinsTotal number of available coins, which is very close to the circulating supply, indicating a limited number of coins left to be circulated.Max Supply: 31,415,926 coinsThe maximum number of coins that can exist. A maximum supply indicates that no additional coins will be minted, potentially increasing the coin's value with rising demand.Fully Diluted Market Cap: $845,001,511Market cap if all possible coins were issued. Indicates potential for further growth if the number of available coins increases.Based on this data, we see that EGLD is a strong cryptocurrency with significant growth potential. However, enhancing our analysis with additional tools is essential. We will cover these tools in a later chapter of the book.
Chapter 3: How to Use CryptoRank to Enhance Your Project Analysis
In this chapter, we will learn how to use the tools on CryptoRank to analyze digital projects and enhance your understanding. We will focus on exploring important information using the example of the EGLD (MultiversX) token.
1. Accessing CryptoRank and Searching for the Token
The first step is to go to the CryptoRank website. After that, use the search bar to type in the name of the token you want to analyze. In this example, we will type EGLD into the search bar. Once you enter the name, a page containing all the information related to the token will appear.
2. Exploring the Overview Section:
2.1 Key Info: Basic Information;
In the Overview section, we start by clicking on MultiversX Key Info. Here, you will find a set of important points that you need to understand.
Category:
ย For EGLD, the listed category is Chain.
Category Explanation: "Chain" indicates that this project is an independent blockchain, which means it has the capability to run decentralized applications and fully control its ecosystem. Understanding the category helps you grasp the nature of the project and the infrastructure it relies on.
Tags (Subcategories):Smart Contract Platform: This tag indicates that the project provides a platform for developing and executing smart contracts. These contracts are software programs that run on the blockchain and automatically execute agreements based on specified conditions.
MultiversX Ecosystem: This means the project is part of the MultiversX ecosystem, indicating that it interacts with other projects and tools within this system.
Layer 1: This indicates that EGLD is a primary blockchain network (like Bitcoin or Ethereum) and is not built on top of another network.
Importance of Subcategories: Understanding these points helps you recognize the areas the project focuses on and how it utilizes modern technologies in developing its solutions.
Launchpads:In the case of EGLD, we see that the token was launched through Binance.Launchpads Explanation: Launchpads are platforms that help projects raise funds through an initial token offering. There are two common types:ICO (Initial Coin Offering): This is the process of initially launching a token, usually online through the project's own website, where investors purchase the token directly from the issuing company.IEO (Initial Exchange Offering): Similar to an ICO, but the initial launch is done through a centralized exchange platform like Binance, providing an additional level of trust for investors due to the platform's oversight of the process.
2.2 The Importance of Key Info in Analysis:
The information obtained from Key Info can be extremely useful in evaluating the strength of the project in terms of technology, infrastructure, and partnerships. These points help us in deeper analysis of the network and its activity.
3. Exploring the Funds and Backers Section:
3.1 The Importance of Having Supporters and Investors:
Having supporters and investors in the project indicates a high quality. In the Funds and Backers section, you will find a list of the main investors and backers of the project. This section is important because it gives you an idea of how much trust large institutions have in the project. For example, if one of the backers is Binance Labs, it indicates that the project is supported by a leading global platform in the cryptocurrency field.
3.2 Classification of Supporters (Tiers):
Investors and backers are usually classified into categories like Tier 1 and Tier 2.
Tier 1: These are the leading institutions with a proven track record of successful investments and are considered major players in the market.Tier 2: Includes institutions with a good reputation but may be less well-known than Tier 1.
Having Tier 1 backers like Binance Labs enhances the project's standing and increases the likelihood of its success.
4. Additional Steps: Exploring and Classifying Funds
When visiting the Fundraising section and selecting Funds, you will find all the investment companies and their classifications. If you click on any of them, the Social Media and Portfolio sections will appear, where you can find the tokens that these companies have invested in.
Chapter 4: How to Analyze Crypto To Using DeFiLlama
To understand how to analyze a cryptocurrency project using DeFi Llama, we will provide a step-by-step guide. As an example, we will analyze MultiversX (EGLD) to demonstrate the process.
Step-by-Step Guide to Analyzing a Token Using DeFi Llama
Access DeFi Llama:Open your web browser and go to DeFi Llama.
Search for the Token:Use the search bar at the top of the page to type "MultiversX" or the symbol "EGLD". This will display results related to the token.
3. View Token Information:
After finding the token, click on it to open the details page. Here, you will find information about the Total Value Locked (TVL), associated protocols, and the historical performance of the token in the decentralized finance (DeFi) sector.
TVL, or "Total Value Locked," is a metric used to measure the total value of assets that are locked or utilized within a specific protocol or platform. TVL is expressed in terms of the digital currency and reflects the health and strength of the protocol.
Example: Analyzing MultiversX (EGLD)
Let's analyze MultiversX (EGLD) using the data provided by DeFi Llama to determine its potential and stability as a cryptocurrency project.
Total Value Locked (TVL):MultiversX has a TVL of $100.89 million, indicating good liquidity in the protocols using this token.
Distribution of TVL Across Protocols:The distribution shows that:Hatom Protocol holds $99.01 million of the total TVL, which is about 98% of the total value.xExchange holds $37.1 million.Ashswap holds $5.71 million.This distribution suggests that Hatom Protocol dominates the liquidity on the MultiversX network. Having most of the value locked in a single protocol represents a risk; if this protocol faces issues, it could significantly affect the overall TVL.
Conclusions:
When comparing TVL across different protocols, it is important for the figures to be relatively close to accurately assess the viability of each protocol. For instance, if the TVL of one protocol is $1 billion while another's is $100 million, the large disparity may indicate that the first protocol is dominant and market-leading. In such a case, if the dominant protocol fails, the associated currency might collapse and the project could become unviable.However, if the TVL of two protocols is reasonably close, such as $100 million and $50 million, this difference is not overly concerning. The smaller protocol could be in a growth phase or aiming to compete with the larger protocol, suggesting it might have significant potential in the future. Ultimately, the balance in TVL reflects the strength of the protocols and their ability to attract and retain assets.
Chapter 5: How to Use Unlock Token to Analyze Cryptocurrency Inflation
In this chapter, we will explore how to use the Unlock Token website to analyze EGLD (MultiversX) and determine whether the cryptocurrency is experiencing inflation. We will highlight key points to focus on when analyzing the data on the site.
Steps for Analysis on Unlock Token
Access the Website and Search for the Cryptocurrency:Visit the Unlock Token website.In the search box, enter the name of the cryptocurrency (in this case, EGLD) and search for it.Select the cryptocurrency from the search results to view its details.
2. ย Basic Cryptocurrency Information:
Price: The current price of the cryptocurrency is around $27.Market Cap: The market cap of the cryptocurrency is $748 million. A large market cap indicates price stability and reduces volatility.Fully Diluted Market Cap: This is $850 million. The proximity of the market cap to the fully diluted market cap indicates less inflation risk.
3. ย Supply Information:
Circulating Supply: The circulating supply is 27,360,183 million tokens.Max Supply: The max supply is 31,415,926 million tokens.The fact that 87.1% of the total supply is already in circulation is positive. If there are large amounts of the token yet to be released, be cautious as this might indicate future inflation potential.
4.ย Emission Details:
'Cliff Unlock': Refers to the amount of cryptocurrency released in a lump sum at the start of a specific period. For EGLD, this is 20 million tokens.'Linear Unlock': Refers to the amount of cryptocurrency released gradually over a specified period. For EGLD, this is 8.73 million tokens.
5.ย Deflation Rate:
'Deflation': If the value is zero, it means there is no deflation, indicating a stable supply. If deflation is not zero, it indicates a reduction in supply.
6.ย Total Unlock Progress:
'Total Locked': The percentage of the supply that is still locked, such as 8.54%.'Unlocked': The percentage of the supply that has been released, such as 91.46%.
7. ย Previous Events:
Previous events, such as "July 4, 2024," show details like 2.81k EGLD released daily over 365 days. This indicates an inflation rate of about 0.07% weekly and 0.01% daily. You can calculate these rates by comparing the circulating supply to the quantities released.
8. ย Upcoming Events:
Upcoming events detail the dates and volumes of future releases. For EGLD, the small release percentage suggests it is not inflationary. A larger release percentage could indicate potential inflation.
9.ย Chart Analysis:
The chart provides an overview of the release and distribution over time, offering a clear picture of how the cryptocurrency is distributed.
10. Calculating Network Inflation:
To calculate network inflation, follow these steps:
Find the New Release Amount: Check the 'Cliff Unlock' and 'Linear Unlock' quantities.Determine the Current Supply: Use the circulating supply.Perform the Calculation:Network Inflation Rate = (New Release Amount / Circulating Supply) ร 100.
For example, if the new release amount is 2.81k EGLD daily, and the circulating supply is 27,360,183 million EGLD, the daily inflation rate is (2.81 / 27,360,183) ร 100 โ 0.01%.
Chapter 6: Assessing Security with Certik Skynet
Understanding Blockchain Security
To understand how to analyze the security of a cryptocurrency using Certik Skynet, we first need to understand each section available on the platform and its role in evaluating a project. We will begin with a detailed explanation of the main sections used to evaluate digital projects, followed by a practical example using the EGLD token.
Part 1: Explanation of Each Section in Certik Skynet
1. Certik Security Score:
What is it?
This is the overall security score that reflects the level of security achieved by the project after its review. It is calculated based on several factors such as coding, fundamentals, operations, and community. The security score indicates how reliable and secure the project is.
How to use it?
Projects with a score between 70 and 90 are considered secure and highly reliable. If the score is below 70, it may indicate security risks or weaknesses in some areas of the project.
2. Code:
What is it?
This section evaluates the quality of the project's code. The code score reflects how secure the code is from attacks or vulnerabilities. The project's code is analyzed to ensure there are no bugs that could lead to security breaches.
How to use it?
The higher the code score, the more secure and well-audited the project's code is, indicating that the technical team has worked meticulously to minimize risks.
3. Fundamental:
What is it?
This section evaluates the project's economic and governance fundamentals. It looks at factors related to the project's organizational structure, financial stability, and long-term plans. A well-structured and organized project will have a higher fundamentals score.
How to use it?
We look at this section to ensure the project has a strong organizational foundation, a reliable team, and clear leadership, which boosts the project's long-term credibility.
4. Operational:
What is it?
The operational section refers to how well the project manages its daily activities. This includes logistical and administrative aspects, as well as how the project deals with its day-to-day issues.
How to use it?
We check this section to see how efficiently the project manages its operations, which can further enhance its stability and sustainability.
5. Market:
What is it?
This section reflects the project's popularity and market interest. The higher the market score, the more attractive the project is to investors, and the stronger its liquidity.
How to use it?
We look at the market section to determine if the project is drawing significant investment and attention from the market, which indicates its potential for long-term growth.
6. Community:
What is it?
This section shows how engaged the project is with its community and how much support it receives from followers on social media. Projects with active and large communities are generally more stable and have higher growth potential.How to use it?
We use this section to assess how active the team is in communicating with its community and how much the audience interacts with the project on social media platforms like Twitter.
Using Certik to Assess Risk
Part 2: Case Study Using EGLD
Now, we will apply the above explanations to the EGLD token:
1. Certik Security Score for EGLD:
Security Score: 92.78 AA / RANK 4 /TOP10%
EGLDโs high security score indicates that the project is reliable and secure. This shows that the team has thoroughly audited the code and operational processes, minimizing security risks.
2. Code for EGLD:
Code Score: 89.6 (Top 10% percentile)
This score reflects that the coding behind EGLD is strong and has been carefully audited to ensure no vulnerabilities. Being in the top 10% percentile means the project places a significant emphasis on technical security.
3. Fundamental for EGLD
Fundamentals Score: 95.89 (Top 10% percentile)
This high score shows that EGLD has a strong economic and governance structure, reinforcing the trust in its long-term sustainability. The presence of a strong team and clear leadership adds credibility to the project.
4. Operational for EGLD:
Operational Score: 91.25
This score indicates that the operational processes at EGLD are highly efficient,suggesting that the project is well-managed and capable of handling daily operations with competence.
5. Market for EGLD:
Market Score: 96
A high market score means that EGLD is very popular among investors and enjoys strong liquidity. This widespread interest is a positive indicator of the projectโs ability to grow and sustain itself.
6. Community for EGLD:
Community Score: 95
EGLD has a highly active and large community on social media platforms like Twitter, with over 500,000 followers. This level of community engagement strengthens the project and increases overall trust in its development.
Conclusion: How to Determine if a Project is High Security and Trustworthy?
Based on Certik Security Score and the distribution of data across the different sections, we can conclude that EGLD is a highly secure and trustworthy project. The most critical factor to focus on is the Certik Security Score, as it summarizes all the key data. If the score is high, the project can be considered secure. However, if this score is absent or falls below 70, it may raise doubts about the projectโs security.
FINALLYย
Thank you very much for taking the time to read my book. The journey of writing this book has been a rich and rewarding experience, and I hope the content has helped you understand key aspects of the cryptocurrency world. The goal of this book is to simplify complex concepts and present them in a way that is accessible to beginner investors.
I hope the information provided has positively impacted your knowledge and investment tools. While I have made every effort to simplify the terminology, the book should not be seen as a substitute for in-depth research and personal effort. I encourage you to continue learning and delving deeper into this field to maximize your benefits.
Thank you again, and I wish you all the success in your investment journey.
If you have any questions or need further information, feel free to reach out through my social media channels:
My Social Media Links ๐ฅฐ : https://linktr.ee/kizoki_yz
Best regards,
Kizoki
$EGLD
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