The overwhelming number of cryptocurrencies and tokens (one of the popular aggregators has more than 20,000 assets) will depreciate as the industry matures. Many will not stand up to competition without offering real use cases, others will go into oblivion because of their initially fraudulent nature.
In order not to make a mistake in choosing when forming a portfolio of crypto assets, it is recommended to conduct a comprehensive assessment, which includes a thorough study of the white paper and the roadmap of the project, its team, social networks, support by developers, users and venture investors and tracking how everything conceived comes to life.
It is necessary to study the competitive field and have some accumulated background for filtering out stories that can get wide publicity in the media and even receive hundreds of millions of dollars of support from the largest players in the industry, but fail, as it was with Terra and its LUNA and UST due to an unstable, rather experimental business model.
A good start for the selection will be such a parameter as market capitalization – it is better to narrow the sample to the top 30. The project cannot be highly appreciated just like that, because of “people’s love”, although there is such a phenomenon as meme tokens – DogeCoin, Shiba Inu and their various clones, which at their core actually have no fundamental basis.
Often, there may be more expectations in prices than any real progress in the implementation of the roadmap – monitoring the activity of developers and users, as well as team comments on development, can be an assistant here.
Adding to this assessment the possibility of using an asset in DeFi protocols, income from staking, if it is assumed, may complicate the assessment, but without this it will be incomplete.
In addition to the utility that determines demand, it is also important to evaluate the supply – the nature of the issue, the rate of inflation and distribution (the FDV/MV ratio, which takes into account these nuances, will be important in this regard).
The difference in the nature of blockchains, as well as the presence of tokens that are built on top of them, does not allow the formation of a single assessment tool. For example, for DeFi projects, it can be FDV /TVL, and for L1 – a large number of different on-chain indicators that analytical services calculate only in relation to the most popular ones like bitcoin and Ethereum.
Since the beginning of the year, Ethereum Classic has shown one of the best indicators in terms of price dynamics in the top 100, which is due to expectations of hashrate growth as a result of the migration of miners from Ethereum due to the upcoming transition of the latter to the Proof-of-Stake consensus algorithm. It is possible that after the expectations have come true, this relative revaluation of the asset will come to naught.
It is worth carefully monitoring ApeCoin
Which can be classified as meme tokens – it has not surpassed DOGE and SHIB, but in the conditions of crypto–winter there is no great reason for this.
From the category of relatively “undervalued”, you can pay attention to Solana and Avalanche, which are able to continue competing with Ethereum in the DeFi space. Their relatively high losses since the beginning of the year are due to the collapse of Terra.
MATIC may also be of interest due to the further development of L2 solutions for Ethereum.