Which Crypto to Buy Now? How To Do Your Own Research (DYOR)
Wondering which crypto to buy now? What crypto to invest in? Crypto has been a life-changing investment for so many people and it’s natural that new investors to the space want to achieve the same level of financial success. Intuitively, these investors recognise that selecting the right cryptocurrency is the most important decision they will make when investing in crypto.
At Cointree, we’ve been helping tens of thousands of Australians grow their crypto portfolios since 2013, and while we can’t provide any specific financial advice about what cryptocurrency to invest in, we can show you the step-by-step process that many investors follow before they decide which crypto to buy.
In this guide, we see how to identify an opportunity, research a coin, check the metrics, and make your move. But before we get into the research process, let’s quickly see exactly what it means to do your own research (DYOR) in crypto.
Overview: How to Do Your Own Research (DYOR) in crypto
- Identify an opportunity - Look for an emerging trend in the crypto space.
- Research the coin - Read the whitepaper, review the team, and examine the network effects.
- Check the metrics - Make sure the value matches the market opportunity.
- Make your move - Pick an investment strategy and buy the coin.
What does Do Your Own Research (DYOR) mean in crypto?
DYOR is an acronym for Do Your Own Research. It has become one of the most popular terms in the cryptocurrency community, encouraging individuals to think for themselves and conduct due diligence before investing in a cryptocurrency. Ultimately, the DYOR reflects the core ethos of crypto—don’t trust, verify.
Which crypto to buy now? Learn how to do your own research (DYOR) and identify what crypto to invest in
A great crypto investment can change your life. We need look no further than these bitcoin millionaire stories to see that! However, there are no guarantees in investing, so it’s important that you research thoroughly and apply clear thinking to move the odds in your favour.
1. Identify an opportunity
Everyone can see that crypto is going to change the world. The centralised architecture of web2 is giving way to the decentralised internet of value that is web3 and banks are now being replaced by bitcoin and decentralised stablecoins. Still, most people disagree about exactly which crypto protocols are going to have the biggest impact over the long term. That means there’s still a huge opportunity for investors who can pick the right projects.
Current crypto trends include:
- Bitcoin as a store of value.
- Decentralised stablecoin protocols like Terra.
- Smart contract platforms like Ethereum.
- ‘Ethereum killers’ like Avalanche, Solana, and Cardano.
- Multi-chain ecosystems like Cosmos, Polkadot, and Near.
- NFTs and the metaverse like Sandbox and Decentraland.
- An emerging digital economy with many sectors.
You can also check our top performing portfolios to see what cryptocurrencies investors are holding in the best performing portfolios over the past 24 hours.
2. Research the coin
Every crypto founder has a story to tell about a problem they solve. They put in the work, build a team, and show how they will change the world. But that doesn’t guarantee that every project will be a great investment. That’s why it’s our job as an investor to put in the work and select the very best projects. It’s easy to get overly excited in crypto, but research keeps us rational.
A great idea isn’t enough for a project to become successful. Looking back at the internet tech boom of the early 2000s, we can see that while most of the companies failed, almost all of the ideas were later proven successful. For example, while Pets.com famously went bankrupt, the idea of an online pet store was proven successful by the now multi-billion dollar company Chewy. Here’s the important lesson: a great idea doesn’t guarantee success.
Instead, it pays to pick a winner. Google was the winner of search, Amazon was the winner of e-commerce, and PayPal was the winner of online payments (that last one is changing though). And anyone who identified these companies as likely winners made life-changing investments. Of course, it’s easy to invest in retrospect, but we can still improve our odds of making the right investment.
So how do we identify what crypto to invest in? Research can help us pick those winners. Assuming the project has found a great way to solve an important problem, we can focus on the other factors that make up a great company.
- Whitepaper - The problem it solves and the total addressable market it can capture.
- Community - The users, investors, and broader ecosystem.
- Team - The people building the project, including the founder, developer, and operations.
- Network effects - The speed the network is growing and the stickiness of participants.
Here are some key questions to answer before making an investment:
- Is the team qualified?
- Is it sufficiently decentralised and secure?
- Does it have strong network effects and a vibrant ecosystem?
- Can the project survive a bear market?
- Can it navigate the regulatory landscape?
While a project doesn’t need to be perfect in every respect, the stronger it is overall, then the higher the chances it will prove a lucrative long-term investment.
3. Check the metrics
Numbers don’t lie! Any good investor checks the figures before they invest and it’s no different in the crypto industry. Although there are no quarterly earnings reports like in the traditional financial system, there are key metrics to help you invest. Also, checking the metrics makes it easy to compare different cryptocurrencies.
Key metrics to check before you invest:
- Market capitalisation - This is the current price of a cryptocurrency multiplied by its current circulating supply.
- Volume 24hr - The total dollar volume of the cryptocurrency transacted in the past 24 hours.
- Supply - The number of coins currently liquid and in circulation.
- Price - The amount it costs in Australian dollars to buy a single token or coin.
Secondary metrics that can reveal more about a cryptocurrency:
- Total Value Locked (TVL) - The total value of the collateral deposited to a protocol (most applicable for DeFi projects).
- Fully diluted value - The maximum amount of the crypto that will ever be in supply.
- Active addresses - The number of wallets that have been created to hold the coin.
- Number of users - The amount of actual people that are using the network.
- Transaction fees - The fees or income generated by a protocol.
- All-time high - The highest price the token has hit.
- All-time low - The lowest price the token has hit.
Here are a few things to look out for when checking the metrics:
- Cryptocurrencies with smaller market caps can have a greater upside, but are often more risky investments.
- The number of users and active addresses are a great way to measure the network growth of a protocol.
- If you want to purchase a large amount of a crypto with low 24hr volume, it may be best to buy it OTC (Over The Counter) so that you don’t significantly increase the price with your purchase.
To research cryptocurrency in even more depth, check out our article on the three types of cryptocurrency analysis.
4. Make your move
When you’ve identified a cryptocurrency that you want to invest in, and determined when you want to enter the market, it’s time to make your move. You can make a purchase or set up an auto-trade on Cointree in just a few minutes. Simply sign up, verify your account, deposit funds, and buy the crypto. It’s that easy!
Now, you know which crypto to buy and how to buy it. At this point, many investors want to keep building their knowledge and their portfolio, so they choose an investment strategy to help them grow.
Popular investment strategies include:
- Dollar-cost averaging - Investing the same amount of money every week or month.
- Micro-investing - Automatically investing a tiny amount of money frequently.
- Hodl - Make a purchase and hold it as a long-term investment.
- Actively trade - Buy and sell the coin to take advantage of market moves.
- Buy now - Get started right now and let your strategy evolve over time.
Example: How To Do Your Own Research (DYOR) and identify what crypto to invest in
Now that we’ve run through the process of identifying which crypto to buy, let’s run through a quick example so you can see it in action.
1. Identify the opportunity (Terra example)
Stablecoins like USDC and USDT have secured hundreds of billions of dollars worth of value. There’s a clear product market fit for them in the crypto ecosystem. However, these projects remain centralised at their core, as the dollars backing the coins are held in the traditional financial system.
In contrast, decentralised stablecoin protocols like Terra (LUNA) fulfill the crypto vision of decentralisation. They provide all the value of a stablecoin while still being decentralised. This is clearly a growing trend in crypto, so let’s research the coin further.
2. Research the coin (Terra example)
The concept of a decentralised stablecoin protocol is sound. There is a clear product market fit within the ecosystem. However, there are multiple decentralised stablecoin projects. So, the key question is whether Terra could be the winning protocol that generates the most value for investors.
Let’s start with the basics:
- Whitepaper - A clear vision they want to become a leading medium-of-exchange in online payments, allowing people to transact freely at a fraction of the fees charged by other payment methods.
- Community - Terra has a vibrant community of #LUNAtics on Twitter (324k), Discord (24k), and Telegram (2k).
- Team - Terra was founded in January 2018 by Daniel Shin and Do Kwon. Kwon then took on the position of CEO of Terraform Labs, the company building Terra. Both have proven successful as entrepreneurs, while Kwon also worked as a software engineer for Microsoft and Apple. They have both the technical and business expertise to build a successful crypto project.
- Network effects - The Terra protocol has a number of network effects to support its growth. Firstly, it’s integrated with the Cosmos ecosystem so is incredibly easy to use by dApps there. Furthermore, it’s building bridges to all the popular layer 1 protocols. Secondly, Terra can be used to create stablecoins in many different currencies, not only USD. Finally, Terra is the most popular decentralised protocol and this gives users easy access to liquidity. Still, there are some strong competitors like MakerDAO and Celo.
Now, we’ll quickly answer some of the key questions about the project:
- Is the team qualified? The team is clearly technically adept. They have also proven they can build a strong community around the protocol.
- Is it sufficiently decentralised and secure? Terra has secured billions of dollars of value so far and has proven secure. It’s important that the protocol continues to hold its peg to fiat currencies throughout difficult market conditions.
- Does it have strong network effects and a vibrant ecosystem? Terra has one of the strongest communities in crypto and their stablecoins are increasingly being used in DeFi projects, further establishing them as a foundational piece of the crypto ecosystem.
- Can the project survive a bear market? Stablecoins are widely held at the start of bear markets as investors go to risk-off positions, indicating that demand will be stickier than other projects.
- Can it navigate the regulatory landscape? It’s unclear how governments will treat decentralised stablecoins. One advantage of Terra is that it supports stablecoins for multiple currencies.
At this point, it’s clear that Terra is an exciting project, so let’s continue and do your own research (DYOR) on the metrics.
3. Check the metrics (Terra example)
The numbers never lie, so let’s see what they have to say about Terra (LUNA). It’s important to remember that figures can change quickly in crypto, so it’s a good idea to periodically check these metrics as you manage your crypto portfolio.
Key metrics as of the 5th of February, 2022:
- Market cap - AU$29,417,121,342
- Volume 24hr - AU$2,651,572,912
- Supply - 1.7 million LUNA tokens
- Price - AU$73
These metrics are sure to change significantly, so make sure you check the Terra (LUNA) page for the latest figures.
Secondary metrics as of the 5th of February, 2022:
- Total Value Locked (TVL) - Terra has a TVL of AU$19 billion, which is the second-highest amount of any blockchain. Notably, it has 28 times the TVL of its competitor Celo.
- Fully diluted value - AU$61,101,204,027
- Terra analytics - Checking the latest data, we can see there's 11.3 million UST in circulation.
- All-time high - AU$142 (Dec 2021)
- All-time low - AU$0.19 (March 2020)
What can we learn from looking at these metrics? It’s clear that Terra is already a successful protocol. Given that it already has a market cap of tens of billions of dollars, it’s unlikely to rise 1000% in a week like some small-cap coins. Instead, investors may be looking at it as a successful protocol that can continue to grow with the space.
4. Make your move (Terra example)
It’s time to decide whether to buy! If you’ve decided that a cryptocurrency is worth investing in, it’s time to make your move. There are many investment strategies that could make sense. Investors could dollar-cost average into a position expecting to ride out the waves, make an initial investment only, or trade daily. The important thing is to take action and follow the investment strategy that is right for you and your investment goals.
Conclusion - Managing your investment
Congratulations! You’ve learnt how to do your own research and identify which crypto to buy now. You’re well on your way to building an impressive crypto portfolio filled with exciting digital assets. The journey isn’t over once you’ve made your crypto investment. After you buy your coins, it’s time to manage it.
Firstly, to help you manage your investments, check out the auto-trade features and price alerts that are available on Cointree. They can help make sure you never miss a money making moment. Secondly, you get access to a personalised dashboard when you trade on Cointree. It gives you a quick overview of your portfolio, so you always know how your coins are performing. Finally, you will receive a free multi-coin wallet to store all of your coins when you trade on our crypto exchange.
At Cointree, we’re here to help you grow. From identifying what crypto to invest in for the first time, to exploring the future of cryptocurrency, we’re here to give you the knowledge and the tools to help you trade smarter, whether you’re a complete beginner or expert trader.