Initial Coin Offering (ICO) – How to Find New Cryptocurrencies for Investment

Is there light at the end of the tunnel for cryptocurrencies, including the largest such asset class, Bitcoin?

After Bitcoin and other ICO fell earlier this year, Bloomberg reports that Bitcoin may have reached its floor. “Bitcoin may be finding some support at its 2017 peak of $19,511—which, at the time, was a record high for the largest cryptocurrency.”

Since mid August, the token’s value has gone down, falling below the closely watched $20,000 level. However, it has not fallen below the 2017 high during this time. Traders are watching technical levels to see if bitcoin has found a floor after a 57% plunge in 2022,” writes Joanna Ossinger.

Maybe yes, maybe no.

Even though or maybe because of how volatile this asset class is, “buy low, sell high” is the most important rule in finance, and cryptocurrencies are becoming a bigger part of that. As a result, cryptocurrency prices and valuations have soared over the past decade as investors, looking for growth in a zero interest rate environment, have poured money into the asset class, and this year they have been hit by sharp declines.

In an ICO, remember that the ‘C’ stands for ‘Coin,’ not ‘Currency.‘ Most are not money; they’re tokens with utility.

Andreas M. Antonopoulos, Blockchain Advocate

Overall, though, the influx of money has pushed the limits of investing in cryptocurrencies and made it harder to do so. Currently, there are more than 20,000 cryptocurrencies available for trading. Each cryptocurrency has a number of technical terms, many of them difficult to explain, to sell its value proposition.

So how do you find a cryptocurrency to invest in? Knowing where to look and how to evaluate them will help you determine whether or not they are worth investing in.

Where to Find New Cryptocurrencies

Should you invest in an initial coin offering (ICO)? Are non fungible tokens (NFTs) a good idea? What is DeFi? Navigating the cryptocurrency landscape can be confusing. Potential investors are wary because there are so many scams and there aren’t any clear, measurable criteria for judging them. However, despite the issues, cryptocurrencies can be an asset class worth investigating. They can add diversity to your portfolio, and their price volatility can offer good returns. There are several sites you can check out to see what new cryptocurrencies are emerging:

• Cryptocurrency exchanges: Coinbase, Gemini, Kraken, Crypto.com, Binance, Gemini
• Data aggregator: Coingecko, CoinMarketCap
• Social media: Twitter, Telegram, Discord
• Websites: Top ICO, Smith & Crown, ICO Bench
• Tools: PooCoin Charts, TokenSniffer
• DeFi Platforms: apps that are supplanting traditional financial services. Some may have tokens or coins with prospects.
• NFT Marketplaces: OpenSea, Rarible and SuperRare are popular marketplaces to look for promising new NFTs.
• ICOs: Initial coin offerings are fundraising events for potential coin launches.

Exchanges

Cryptocurrency exchanges are one of the most reliable sources for finding new investments. For example, Coinbase often lists new cryptocurrencies on its website, but you have to open an account to get better access. Binance has a list of new cryptocurrencies that you can check out and research further.

Data Aggregators

A data aggregator gathers information on specific topics. Cryptocurrency data aggregators help you find new cryptocurrencies. For example, CoinMarketCap collects and displays a list of new cryptocurrencies, their prices, market capacity, and trading volume. This type of service helps you get information to determine what other investors think about the cryptocurrency and whether it has potential.

Market capacity is the total fiat value that a specific cryptocurrency has in the market.CoiGecko is another data aggregator that lists new coins with much of the same information that CoinMarketCap offers.

Social Media

Social networks are known for their ability to convey information quickly. Twitter, for example, is one of the fastest moving and most responsive platforms in the U.S. Cryptocurrency developers and founders can be found on Twitter, tweeting about their cryptocurrency whenever there are changes or new coins. Keyword specific notifications on Twitter are especially useful. If you set up alerts for “new cryptocurrency,” “cryptocurrency launch,” or simply “cryptocurrency,” you will receive notifications about any cryptocurrency related tweets.

Telegram is another instant messaging platform that can offer timely new cryptographic developments.

Websites

There are many websites you can check out to find new cryptocurrencies. Some of the most reputable ones are Top ICO, Smith & Crown and ICO Bench.

Tools

You can use several tools to help you verify the validity of a cryptocurrency. PooCoin Charts allows you to enter the token’s name or address and displays information about transactions, contracts, holders, price and much more, allowing you to see if someone else is active.

Tokensniffer allows you to enter the name or address of the cryptocurrency and displays an audit of the cryptocurrency. For example, an analysis of Ax 1 Orbit (address 0x0c…b805) showed the following information on August 13, 2022:

• Attention: Coin was flagged for being part of a scam, bug or hack
• Exchange analysis: Token is saleable, has a buy and sell rate of less than 10%
• Contract analysis: Contract verified, no previous similar contracts, source does not own, no special permissions from creator
• Holder analysis: Creator has less than 5% of the bid, other holders have less than 5% of the bid
• Liquidity analysis: not enough liquidity, 95% of the liquidity is burned/blocked, creator owns less than 5% of the liquidity
• Similarity of tokens: none

Token snifferToken Sniffer allows you to view the contract code and generate a bubble map that shows you the creator’s address, the addresses of the top 100 holders, and the percentage they own. You will also see the burn addresses, which is where the creators send the coins to take them out of circulation for good.

DeFi Platforms

Decentralized financial platforms (DeFi) are a relatively new venue for cryptocurrency investments. They function like traditional financial markets, but use smart contracts to execute transactions. Many DeFi platforms have native tokens used within their networks to facilitate transactions. Examples of DeFi platforms include Kraken, Binance and BitStamp.

Non Fungible Token (NFT) Markets

NFTs are unique digital assets that have been “tokenized.” Tokenization is the process of linking an encrypted alphanumeric sequence to the asset and storing that information on a blockchain. This makes it clear who owns the token, since validators on the token’s network must reach a consensus on who owns it.

Luxury retailers, such as Tiffany and Gucci, use NFTs, which are popular with some customers.NFTs are also critical components of the metaverse, an emerging technology trend championed by companies operating in the digital landscape.

Examples of popular NFT marketplaces include OpenSea and Rarible, where hundreds to tens of thousands of dollars can be found. There are also specialized marketplaces that focus on a specific industry or sport. For example, the National Basketball Association (NBA) has an NFT marketplace called TopShot, while the National Football League (NFL) has partnered with Dapper Labs to produce exclusive digital videos of iconic moments in its history.

Initial Coin Offerings (ICO)

Initial coin offerings eclipsed venture capital as the primary fundraising method for entrepreneurs in 2018. Startups and prominent companies alike jumped on the ICO bandwagon. Then the ICO bubble burst, as scams proliferated in their ecosystem and the Securities and Exchange Commission (SEC) began investigating and cracking down on them.

Exchange Traded Funds (ETFs)

It is also possible to invest indirectly in cryptocurrencies through derivatives traded on major exchanges. Chicago Mercantile Exchange (CME) cryptocurrency futures, including bitcoin and ether futures, are a popular choice among investors seeking indirect exposure to cryptocurrencies. Bitcoin linked ETFs, based on CME bitcoin futures, debuted in the cryptocurrency markets in 2021, and more continue to appear as brokers work to persuade the SEC to approve cryptocurrency linked ETFs.

Search for New Cryptocurrencies

Under their technical jargon, cryptocurrencies are products that serve a purpose, either just as a method of payment (Bitcoin) or as a utility token used to perform actions on a blockchain (ether). Here are some factors to consider and tools you can use to help identify a coin that is not a so called “rug pull” coin, i.e., a coin whose developers will accept payments for it and then remove it from the platform where you bought it, keeping the funds you paid for as well.

Many cryptocurrency data aggregators can provide inaccurate information from exchanges. CoinMarketCap, one of the leading cryptocurrency price trackers, has had problems with inaccurate data.

Case Studies

Ethereum’s ether token (ETH) is used as gas on its blockchain. Gas is what Ethereum calls the process of paying someone for the energy they use to verify a transaction. This makes ETH a perfect example of a use case that could incentivize someone to buy ETH. Ethereum is designed for scalability and future development. Many decentralized financial applications are built on its blockchain, and many more are in development.

Ethereum, the global virtual machine that runs DeFi and might run Web 3, is being used in more and more ways. New tokens designed to run on the Ethereum virtual machine (EVM) are emerging every day.

Bitcoin, on the other hand, was designed purely as a payment method. It became more valuable to investors, prior to 2022, when they noticed price spikes on cryptocurrency exchanges. Shortly before the price spike, it developed a new use as a store of value and asset for investors who enjoy speculating.

The more use cases a new currency and the blockchain it supports have, the more likely it is that the cryptocurrency will last long enough to experience growth. However, this will not always be the case.

Liquidity

A cryptocurrency should be liquid, meaning it should have sufficient trading volume so that you can sell yours quickly if you need to. If you find a cryptocurrency without volume, you should consider waiting to see if it develops. If other investors are not trading a new cryptocurrency in large quantities, it could indicate that it is not yet worth buying or that it is a scam.

Value

You must identify the value a coin has or could have. Chances are that if it has value to you, others will value it. This type of value is not monetary; it is more intangible, such as an NFT that you identify with on a personal level. For example, it could be a graphic that triggers a happy memory for you, and you want the NFT so you can remember it and, at the same time, hope to grow.

Some songwriters and musicians are creating NFTs from their music: buying an NFT of a song directly supports the artists and acquires ownership of the token (and the rights the artist granted when the token was minted). The aforementioned sports tokens may be the equivalent of trading cards or videos of the future.Here’s what you also need to know:

• Price is crucial. One element to consider when looking for the next superstar is the price of the token. For average investors who don’t have a large amount of money to put into the cryptocurrency space, low priced coins may offer the best bang for their buck.
• Prospects for Adoption. If you are able to identify a cryptocurrency, which has an advantage over others (and which therefore may be more likely to be widely adopted), this may be a good investment.
• Supply is a factor. Most cryptocurrencies have a predetermined maximum bid. When that maximum is reached, usually through mining efforts, no new tokens will be produced.
• Price and volume. Up to date cryptocurrency trading information is readily available online. Those digital currencies with rising prices and trading volume are likely to be the ones with momentum. Of course, there is no guarantee that this momentum will be sustained, but it is nonetheless a useful way to see which digital currencies have the most interest for investors at the moment.

Approach Cryptocurrency Startups with Caution

Cryptocurrencies have emerged from the backwaters of conventional finance as an asset for investment. However, the universe of investable cryptocurrencies and related products and services is still small and requires careful evaluation.

If you are interested in investing in digital assets and new cryptocurrencies, you should first speak with a financial professional to help you determine whether the investments make sense for your financial goals and circumstances.

Wrap Up

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, This article is not a recommendation by Capital Manics or the author to invest in cryptocurrencies or other ICOs. Since everyone’s financial situation is different, it is always best to talk to a professional before making any financial decisions. Capital Maniacs doesn’t make any promises or guarantees about how accurate or up to date the information here is.

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