Since the current period is in the bearish phase, it is less easy to make a profit with your cryptocurrencies. To bet on projects promisinghere are 5 indicators to keep an eye on before investing in the bear market.
1. What will the project bring to the ecosystem?
Many projects promise worlds and wonders and sometimes even features that have no use case. A need must therefore first be met to make the project interesting for investors. We must therefore ask ourselves: practical example of a project† Does it bring anything interesting that could last in the long run?
If the answer is no, all you need to do is read a new project’s whitepaper in hopes of finding the rare gem. On the other hand, if the project has specific use cases, we will see another criterion to consider.
2. How does the project differ from its competitors?
The crypto ecosystem is a world full of all kinds of projects and the competition is tough† So the second indicator is how the project stands out from its competitors.
Does it bring real added value with features or a pale copy of what already exists?
In a constantly changing industry, if it is not or very inconspicuous, it is possible that it will never be valued at its fair value. If we take the case of decentralized exchanges (DEXs), today there are many with similar functionality. It is therefore extremely difficult to start up projects of this kind without real added value.
3. How does the project generate revenue?
Whether in crypto or the real world, one remains in a process or a job earns wages. The development of these types of projects will therefore require time and money.
It is therefore important that the protocol takes advantage of its operation. The purpose of this indicator is therefore: understand where and how the protocol will generate revenue build for the long term. In general, the protocols do not benefit from their own tokens that allow to attract new users. Instead, they use the redemption process to buy and destroy (burn) them and to ensure a certain durability of their assets.
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So you have to ensure a certain economic stability of the project so that it is viable in the long term.
4. The Roadmap (project roadmap)
The project roadmap will help define the objects and ambitions. An NFT project that plans to release just one collection has every chance of being forgotten for the next 2 years.
On the other hand, a multi-year project with measurable and achievable goals is much more promising. It is therefore important to give preference to projects whose roadmap is constantly evolving.
This shows a certain motivation of the team to always want to go further.
5. Does the project have money?
A project with money is exposed to the market in the same way as an average user. It is therefore important for him to know how to take his profits and not have any cryptocurrency in his wallet.
In addition, owning cash can allow him to survive during a bear market or rely on third parties for various reasons. This can also enable it to perform certain operations to expand more widely in the ecosystem.
This also allows to have an overview of whether or not the team’s funds are properly managed. A DeFi project that exposes itself too much to certain crypto currencies is not necessarily a guarantee of success and we have seen this recently with the fall of Terra†