Bitcoin has been getting cheaper for more than two months. The cryptocurrency exchange rate began to decline after it updated the historical maximum above $69 thousand in early November 2021. On January 24, the value of the asset fell to $32.9 thousand for the first time since July last year. On January 26, bitcoin is trading at $37.7 thousand, and its capitalization is $716 billion, according to CoinGecko.
Against the background of the decline of bitcoin, altcoins also fell significantly in price. For example, at the moment Ethereum is trading at $2.49 thousand (a decrease of 49% from the historical maximum), the price of Binance Coin is $384 (a drop of 44% from the historical maximum), and the cost of Cardano is $1 (67% below the historical maximum).
Experts of RBC-Crypto explained how to find undervalued projects with prospects for further growth in the conditions of a declining market.
First of all, it is necessary to study all the factors that guide investors, explained Nikita Soshnikov, director of the Alfacash cryptocurrency exchange service. In this regard, he recommended an objective assessment of the reputation of the development team and the target audience of the project.
“Ideally, it should not be an existing niche in which the founders of the project want to introduce digitalization/blockchain/NFT, etc. This should be a new niche that the project creates around itself,” the expert noted.
Then Soshnikov advised to apply a deeper price analysis to the token, which may indicate that it is not undervalued:
Growth below the market average in 2021;
The growth is below the historical maximum reached in 2017-2018;
Significant growth of the user base /liquidity without a similar growth rate.
“Undervaluation is a set of growth factors of technical and user indicators in relation to the growth rate of the coin over the same period,” explained Soshnikov.
The easiest way to earn money on undervalued tokens is to search for large projects that have fallen in price more than the average market over the past two or three weeks, the senior analyst explained Bestchange.ru Nikita Zuborev. He also advised taking into account the fundamental potential and major expected events that could increase the value of altcoin in the future.
“If we consider the metrics of technical analysis, then the relative strength index (RSI) will be useful, after reaching extremely low values, the token has a very high chance of starting a corrective upward movement,” the analyst noted.
First of all, you need to pay attention to those projects that have been working for years and have their own flow of customers, recommended Andrey Podolyan, CEO of Cryptorg. According to him, for some of these projects, development may be more important than stock speculation, so the cost of their tokens will be underestimated. When projects begin to promote the asset and integrate it with larger market participants, the price of the token may soar at times, Podolyan explained.
Expert Advice on Finding Undervalued Tokens
It is necessary to buy tokens only at the moment when there are mass panic sales on the market, Zuborev believes;
Do not buy tokens when it seems that a reversal has occurred and the asset should start to get more expensive. At such moments, it is necessary to take into account only technical analysis, focus on trading volumes and positions in the stock market, Zuborev advises;
It is not necessary to join the “pumps”, the best periods for buying are moments of “sideways” movement at a key level after growth or fall, depending on the overall picture of the market, Zuborev added;
The best strategy is not to try to beat the market and buy in equal shares at equal intervals, which will evenly distribute the entry price into the asset, says Soshnikov;
Break the working volume into several parts and always leave a part of the deposit free so that it is possible to average a bad entry, Podolyan recommends.