The pseudonymous host of Coin Bureau is revealing his method for hunting down altcoins with the potential to print 100x gains, and the steps he takes to avoid getting burned.
The analyst tells his 425,000 YouTube subscribers that one way to protect your capital is to simply identify the key difference between a coin and a token.
Cryptocurrency coins function more like, well, currencies… Cryptocurrency tokens are a different story. Many tokens have characteristics that make them similar to stocks in a company. Regulators like the SEC (U.S. Securities and Exchange Commission) take issue with this given that there is a lot of paperwork that needs to be done before any company can legally issue or trade securities such as stocks.
As you can imagine, not many of these cryptocurrency projects are filing any paperwork which is why many of them have been hit with hefty fines by regulators over the past few years or even shut down. If you come across a cryptocurrency token that has robust tokenomics but is at risk of being deemed a security by regulators, you might want to think twice before you throw your money at it.
Coin Bureau also suggests that traders be on the lookout for the coins distribution and allocation methods to avoid being a victim of price dumps.
A fair launch is when a small community of people start collectively mining a coin or token. Bitcoin (BTC), Litecoin (LTC), and Dogecoin (DOGE) are examples of fair launched cryptocurrencies. There are no coin or token allocations for fair launch cryptos… A pre-mine is when the team behind the project mint some or all of the coins or tokens before opening up the network to the public… Its common for most of the pre-mined tokens to be allocated to the team and private investors such as venture capital firms with only a small percentage being sold to average folk.
The trader says the uneven distribution of coins is a risk factor as large holders can crash the market at a moments notice.
He also recommends investors check on a coins market cap and vesting schedules to make sure they look reasonable.
Coin Bureau adds that traders should pay attention to a coins staking and utility.
He uses ETH 2.0 and Polkadot (DOT) as examples to illustrate the effect staking has on the price of a cryptocurrency.
Disclaimer: The content and views expressed in the articles are those of the original authors own and are not necessarily the views of Crypto News. We do actively check all our content for accuracy to help protect our readers. This article content and links to external third-parties is included for information and entertainment purposes. It is not financial advice. Please do your own research before participating.