Watch out for red signals in finding crypto gems

After discussing what to look for in inexpensive coins, let’s discuss the red signals to avoid.

Promising promises. As with most things in life, if something sounds too good to be true, it almost certainly is.
If the team boasts that this currency will pump 100 times in a week or that you will earn 10% daily, flee to the hills and do not purchase it. They are frequently attempting to artificially inflate the price of the coin in order to offload their own bags onto these new purchasers.

Possibilities for code exploitation. To bolster their coin’s credibility, some projects pay firms such as Certik and Hacken to do smart contract audits and then publish the results. It does provide an increased level of assurance that the smart contract cannot be abused.

Team and community are dormant. In the near term, an active team that knows marketing and has raving fans in the community defeats a team that is solely focused on developing something wonderful, even if their project is superior in the long run.

Ineffective tokenomics. The term “tokenomics” refers to the study of cryptocurrencies. How the coin was distributed, the use cases, the vesting schedule, the overall supply, and the amount of coins in circulation.
Coins with poor tokenomics typically feature founders who own a significant amount of the coins, or initial backers and crypto investors who purchased the coins at a significant discount and are simply waiting for them to unlock so they can sell them and profit from their initial invest
Where to seek for undiscovered cryptocurrency gems?
While some rely on word of mouth from friends and influencers, the best returns come from discovering these currencies independently, before anybody else. The following are the ideal locations to seek for them:
Each time a new coin is made, it must be listed somewhere so that it can be traded. Because listing a currency on well-known and renowned centralized crypto exchanges such as Coinbase or Binance is costly, time-consuming, and subject to several rules, many new coins are frequently posted on decentralized exchanges (DEXes), which allow anybody to list their coin.
Uniswap and SushiSwap are the most widely used DEXs on the Ethereum blockchain, while PancakeSwap is the most often used DEX on the Binance Smart Chain.
Apart from investing in a coin before it is launched, which is difficult to do unless you are a prominent figure in the sector and the team contacts you, a listing is the earliest you may purchase a coin. There are also services, such as ListingSpy, that aggregate all new listings across all DEXes.
Websites that track prices
When seeking for crypto gems, price tracking websites such as Coinmarketcap and Coingecko can be useful. These websites list nearly all tokens with at least some trading volume and are excellent resources for locating inexpensive coins.
They’re frequently categorized by total market capitalization, which means you’ll need to scroll quite a few pages back to find coins with a market capitalization of between $500,000 and $10 million and some trading volume.
Once you’ve identified these currencies, the next stage is to conduct study into the project, the team, the community, the level of activity, and the price history, before deciding whether the risk/reward ratio is favorable enough to purchase some of the coins.
Apps for group messaging
Telegram and Discord are the most widely used group chat tools in the bitcoin industry. Traders form their own groups to debate new coins, exchange signals, and search for gems. Teams form groups to facilitate communication with and notifications to the community.
These are excellent resources for learning about new and existing coins, staying current on developments, and exchanging tips with other investors and traders. Always keep in mind that many are frequently peddling coins they already own with the hope that others would purchase into them. Avoid naively believing what someone says in lieu of conducting your own research.
Reddit and Twitter
Twitter and Reddit are two of the most influential platforms in the bitcoin world. This is where news is announced, where the OGs (OGs stands for original gangsters, people who have been involved in crypto for a long period of time) congregate and debate everything crypto. Traders discuss their methods, teams discuss their current projects, and new coins become popular.
A smart alternate technique is to check Twitter for folks who mentioned a currency first and follow them to see if they mention any new coins.
Social Media
Influencers use social media channels such as Instagram, TikTok, YouTube, and even 4chan to discuss coins and promote trending coins to their followers.
While their allegations frequently lack reality, the ease with which they may amass millions of followers and hype coins makes it worthwhile to pay attention to them in order to learn about which coins are gaining popularity.
Blockchain researchers
Etherscan and BscScan are both blockchain explorers that enable you to do in-depth analyses of any coins or crypto-wallets. They may be used in two ways to locate crypto gems.
The first step is to monitor well-known wallets and see what they are purchasing. You may search for wallets owned by venture capital firms and see which coins they are purchasing, or you can search for wallets held by developers and see when they issue new coins.
A notable example is Andre Cronje’s Yearn finance (YFI) coin. Within a month, the price of YFI surged from $3 to $30,000, and those who followed his money got in early and profited handsomely.
The second method is to conduct research on a currency and determine who the initial buyers were, then begin monitoring those wallets. They are frequently unknown, but it is simple to observe their activities and determine whether they have made a series of sound decisions in a row, at which point you can begin duplicating what they are doing.
Observing trends
Finally, it is prudent to anticipate market trends and stay one step ahead of the competition. When the Ethereum blockchain struggled with high transaction fees, many users transferred to the Binance Smart Chain, which offered lower transaction fees.
Numerous projects developed there were essentially replicas of Ethereum-based projects that saw their price improve as users migrated and usage rose. Another example is when Cardano (ADA) was at an all-time high in terms of popularity. DEXs like as CardSwap and IDO platforms such as CardStarter that are based on the ADA blockchain have also seen an increase in usage and worth.
Who should be on the lookout for crypto gems?
Risk Takers
Investing in unidentified coins with a low market capitalization is a dangerous strategy. Due to the nature of smart contracts, scams are increasingly prevalent, bugs in them are exploited, and they frequently fall as rapidly as they rose. As a result, it is more enticing to people who are willing to take calculated risks and can afford to lose money on occasion.
Individuals with time
Self-searching for crypto gems is a time-consuming activity. And once you’ve located them, it takes time to monitor the currency’s price movement, community growth, and any news or announcements involving the coin.
Individuals with less capital to invest
Due to the minimal volume required to influence the price of these coins, they are more suited to people with smaller investment amounts. While buying $100,000 in Bitcoin will not affect its price, investing that sum in a minor currency may already be excessive. As a result, it is better suited to individuals investing little sums.
Who should not be on the lookout for crypto gems?
Anyone who is fearful of risk
As previously said, mining for crypto gems is a highly dangerous business. Anyone who is fearful of risk and cannot afford to lose their investment should avoid these tactics. For those individuals, a viable alternative is to purchase and retain coins such as Bitcoin and Ethereum over the long term.
Individuals who are unfamiliar with cryptocurrency
Utilizing these strategies demands a working knowledge of the crypto realm. Understanding of how DEXes work and how to use them; familiarity with blockchain explorers; and potentially even the ability to comprehend smart contracts.
In Conclusion
As you can see, searching for crypto gems and discovering them before the rest of the world does is hazardous and time-consuming, but it can also be quite profitable.
Keep an eye out for red signals, be prepared to lose some money, and with time and practice, spotting these gems and profitably trading them will become easier.
Now, more than ever, is an excellent moment to seek for those gems. The market has calmed slightly, prices are more reasonable, and now is the ideal time to hunt for and identify those projects and coins that are expected to soar to the moon once the market resumes its upward trajectory.