Last year was a great year for tokens, moving them from a niche interest to the hottest thing in town. During the last 12 months the top 3 currencies alone saw their market capitalization grow by over 752%, from $22.9 billion to $172.2 billion, while others have even managed to outpace this (by a lot!). 2018 is nothing like 2017 and we are now witnessing the aftermath of this bull run. According to а recent study, 46% of the coins that were launched in 2017 have already failed completely and disappeared – Swisscoin, Bitconnect, LendConnect, Branche are just few of the examples. Combine that with regulatory uncertainties and you get the current market conditions which can be nerve wracking for the more inexperienced participants.
Here are the 6 simple rules that I strictly follow that help me make smarter choices when investing. I recommend them to anyone regardless of age or experience as they sum-up some of the hardest lessons I’ve learned over my experience.
Having the right mindset is key…
Rule #1 – Have the Right Mindset
There is an old saying on Wall Street that goes: “Bulls make money, bears make money, pigs get slaughtered!”. It literally means that it all comes down to having the right mindset.
The bad news is that if you are impatient, greedy, only looking for quick profits and not having a plan on how to execute in different market scenarios, your money will most certainly go into the pockets of the more patient players that have a basic plan.
Here is an illustration of what FOMO driven investing looks like
The good news is that you can fix that relatively easy if you are willing to improve and you pay attention.
Before I even consider looking into a project, I always ask myself these three questions:
1. How high is the market right now?
To make profits you need to buy low and sell high and most importantly be aware of market conditions in order to be prepared for all possible scenarios. If markets are at an all time record high, and you are determined to buy, make sure you buy small chunks at different times and you target assets that are likely to withstand the test of time in case of a correction. If the market is relatively low (like it currently is), then that generally is a great opportunity to buy as long as you don’t put all of your money on a single trade.
2. How much can I wait in case things go bad?
When investing in the coin market (and unless you buy complete crap like bitconnect or other ponzi schemes), time is generally your ally. Here is a historical chart of the 120 years+ course of development of the Dow Jones Industrial trend.
Notice how that chart makes things much easier to understand. Markets are bullish in the long run. You can also spot the overbought/oversold cycles more easily.
Conversely, if you zoom in on that same chart, and focus e.g. on a 3 month period, it will be much easier to get lost and make an irrational decision out of panic. Here is a real-time example of that same Dow Jones Index for the year-to-date period:
This is why you need to take advantage of time when it comes to token investing. The good news about tokens is that due to their extremely high liquidity, the time factor is accelerated when compared to other class instruments (e.g. stocks, bonds, futures etc). It is important to have a backup plan and be prepared to “zoom out” in case things go bad, it’s part of the game and it’s the best way to preserve your wealth. If you can increase/rebalance your investment during an oversold state, then that is the best way to do it.
In order to have the proper mindset, I always remind myself of the previous overbought cycle and the correction that followed…
The people that managed to “zoom out” and took advantage of the oversold cycle that followed Jan 2014 made their fortune after that. The weak, the panicky, the over-leveraged were shaken out and they missed the gains. 3 Years waiting might seem like a lot considering the bull run that took place last year, but patience is the most essential part of the game and history has proven that countless times. This mindset makes me better prepared for a “worst case scenario”. I don’t invest more than what I can afford to wait for 3 years+ and I always keep some resource so I can buy in case of additional market meltdown.
3. Am I buying because others say the price will go up or am I buying because I believe the project will be successful?
Permit me the use of an analogy: after the 2000 dot com bubble, the companies that recovered and made astonishing returns for their investors were Amazon, Microsoft, PayPal, Ebay – all companies with products people needed and loved using; they didn’t recover because people were investing in their name, they recovered because their products had consumer approval. I like to invest in products that I would love to personally use or that I feel a lot of people would love to use on a day-to-day basis. This is a great mindset to have.
Rule #2 – Look for projects with an actual, real product and a clear road map
If 2017 was the year of concept and whitepapers, 2018 is all about live products and adoption.
Make sure there is a real product already available to the users. Unlike promises which are just words, a real, working product validates the value of the service. Of course, this also means the product actually has to have value. At this stage the world does not need more whitepapers, it needs validation.
This conveniently brings us to our third rule, intended to save you from becoming prey to sweet talkers with no substance.
Rule #3 – Find out if the founders have been successful with anything else
Look at this that way – if you can choose between trusting experts or trusting rookies, why would you ever choose the rookies? No matter how much money you throw at their project, it will not improve their business skills. Remember Tezos, Centra and ATB? All of these faced lawsuits which completely destroyed their credibility. Tezos for example did a series of illegal transactions with tokens that were intended only for development use. That’s what happens when a bunch of morons raise $232 million for a worthless company. In other words – look for people who have a lot to lose from betraying your trust.
Rule #4 – Only choose projects with very low reliance on third parties
Can you imagine putting money in a software developer who has a great technology but zero applications likely to adopt and start using that technology? This happens surprisingly often in the virtual coin world as adoption is limited and is subject to fierce competition – something rarely explained in all the one-pagers out there.
Look for projects which own their infrastructure and can output a retail product for you to evaluate regardless of third parties.
Rule #5 – Ensure the coin market cap is low and token supply is limited
Аlways look for projects with a tight supply and low market cap. I never touch tokens which have a large caps because my opinion is that is a sign the moment has been missed out. In addition, there are a lot of projects which do not destroy unsold units after the original sale which means that the supply will not adequately correspond to market demand. On the other hand, if the asset supply is highly limited and the company promises there won’t be any future offerings, you will have protection against oversupply and with these conditions the price may go up as high as 5x-10x within 12 months. You want the coin to be accessible but precious. Speaking of accessibility…
Rule #6 – If it’s not already listed on two exchanges – forget it
Not being listed on an exchange could mean a lot of things, most of which are pretty bad. Maybe all exchanges in the world are rejecting this coin or maybe the team isn’t making the effort to get listed – it doesn’t really matter. I stay away from tokens which aren’t listed on at least two exchanges. If you want to diminish your risk and increase your odds of success you need a competitive advantage. In my opinion some of the greatest opportunities are available on the smaller exchanges so don’t be silly, pay attention where the rest aren’t, and even more importantly – WHEN.
Finally, I know this sounds like obvious advice but it has to be said…
Do not sell too early. Set a target..it can be a target in time, or a target in price and stick with it. Both options are better than just spontaneous emotion selling. Being a weak hand will not let you realize your full potential as an investor.
Is there a company that matches all of the above criteria?
The answer is – yes.
After doing detailed analysis on 100+ tokens, I made my 2018 best pick at the moment. Ready?
My Top Token to Invest In July 2018 is the following one…
1. LockTrip (LOC)
Rating: (4.7 of 5)
After studying more than 100 projects, I can say that the best pick at the moment is called “LockTrip” (their site – https://locktrip.com ). They fit all of my value criteria and seem like a project that can make it in that 1% success stories in the short and long term.
LockTrip completely removes all commissions in the travel industry and adds this value to the customers because they directly provide the same service like Booking.com and Airbnb but at 0% commission. As a comparison, Booking.com charges 15-35% and Airbnb charges 18% which ends up in 20-30%+ higher prices for travelers.
They already have a live booking marketplace (https://alpha.locktrip.com/) where you can book among 100,000+ hotels worldwide with the LOC token. In a recent material, their team compared 800 hotels in 45 cities in 3 continents with the same hotels listed on Booking.com and Agoda.com, and have proven that their prices are 20% cheaper. You can check their post here.
This creates an immediate and unique application of the token and beats 99% of the projects out there. A token with real fundamental value, worth buying for the purpose of cheapening your next travel and not for just pure speculation like the majority out there, sounds weird doesn’t it? That’s because most other tokens don’t have any real world application.
The company completed its launch in November and has sold approximately $6 Million worth of LOC tokens to a vast community of travel lovers and end users. They are not hype driven and have a 100% organic community.
Their total token supply is extremely limited – a total of 18.5 Million LOC, and there will be no emmissions in the future. Considering the current market conditions, I believe that LockTrip can reach a significant growth over the next 6-9 months.
The LOC token price is around $1 at the time of writing the list. Their market cap is less than $10M which is completely undervalued. My price prediction for LOC is for $10 within a 6-9 months range (that’s more than 1000% growth). Depending on the number of bookings that they process through their marketplace, this can increase up to $20 or more because of the limited token supply and also because every booking results in LOC tokens locked into bookings escrow/smart contracts for the duration of the travel, that further cuts the limited token supply and hence – more bookings = less tokens.
Final Verdict: I strongly recommend to look into their project as it really stands out from all the hype driven trash that we see every day. Check out the project at https://locktrip.com
- Real working product that has been proven to make global travel cheaper – they have 100,000 hotels which you can book as of this moment
- 20% lower prices when compared to Booking.com, Agoda.com and Airbnb – simple as that
- Best Road-Map I’ve seen – live product with retail user focus.
- Very Low dependency on third parties – they have already launched their own retail application with a working product
- Completely organic community. You will find real discussion going on in their telegram from industry professionals and travel lovers