Newbie in Crypto Day 6: A coin suddenly surged—so first I’ll look at these 5 data points.
Before, when I saw a coin suddenly jump 20%, 50%, or even double, my first reaction was:
“Can I still chase it?”
Now I’m slowly realizing that what I should really ask first is:
“Why did it rise?”
So I’ve put together the simplest new-coin observation method for myself.
① Market cap
First, find out how big this coin actually is.
With the same 50% increase, a large-cap coin and a small-cap Meme coin are backed by completely different amounts of money.
The smaller the market cap, the more volatile it often can be.
② Trading volume
As the price rises, is the trading volume clearly increasing too?
If the price suddenly spikes but the trading volume is very small, I become much more cautious.
③ Liquidity
This is extremely important.
Some coins look like they’re rising dramatically, but in reality there’s very little tradable capital in the market.
In that case, a single relatively large buy order could push the price much higher—but it could also get dumped quickly just as fast.
④ Holder concentration
If most of the tokens are concentrated in only a few wallets, I get especially alert.
Because once these big holders start selling in a concentrated way, the price could be hit with a huge shock.
⑤ Changes in price and trading volume
I won’t just look at:
“How much did it rise today?”
Instead, I’ll look at price and trading volume together.
For example:
Price rises + volume expands
versus
Price rises + volume shrinks
The market situation behind them could be completely different.
⸻
When I used to research a coin, the first thing I checked was:
“Can it go up?”
Now I plan to ask first:
“What’s the market cap?”
“What’s the trading volume like?”
“Is the liquidity enough?”
“Is the supply concentrated?”
“Does this rally have real trading support?”
At least get these figured out first, and then consider whether to get involved.
Day 6, continue learning Web3.
$BNB
Before, when I saw a coin suddenly jump 20%, 50%, or even double, my first reaction was:
“Can I still chase it?”
Now I’m slowly realizing that what I should really ask first is:
“Why did it rise?”
So I’ve put together the simplest new-coin observation method for myself.
① Market cap
First, find out how big this coin actually is.
With the same 50% increase, a large-cap coin and a small-cap Meme coin are backed by completely different amounts of money.
The smaller the market cap, the more volatile it often can be.
② Trading volume
As the price rises, is the trading volume clearly increasing too?
If the price suddenly spikes but the trading volume is very small, I become much more cautious.
③ Liquidity
This is extremely important.
Some coins look like they’re rising dramatically, but in reality there’s very little tradable capital in the market.
In that case, a single relatively large buy order could push the price much higher—but it could also get dumped quickly just as fast.
④ Holder concentration
If most of the tokens are concentrated in only a few wallets, I get especially alert.
Because once these big holders start selling in a concentrated way, the price could be hit with a huge shock.
⑤ Changes in price and trading volume
I won’t just look at:
“How much did it rise today?”
Instead, I’ll look at price and trading volume together.
For example:
Price rises + volume expands
versus
Price rises + volume shrinks
The market situation behind them could be completely different.
⸻
When I used to research a coin, the first thing I checked was:
“Can it go up?”
Now I plan to ask first:
“What’s the market cap?”
“What’s the trading volume like?”
“Is the liquidity enough?”
“Is the supply concentrated?”
“Does this rally have real trading support?”
At least get these figured out first, and then consider whether to get involved.
Day 6, continue learning Web3.
$BNB