Last updated on November 8th, 2021 at 09:35 pm
Truly, the potentiality of cryptocurrencies to create generational wealth is sublime, and almost unparalleled.
Testimonies abound of investors and traders making immense profits from good old trading such as derivatives trading, spot trading, arbitraging, etc; while there are others that have scored their fortunes by making a punt on one coin that undergoes a massive boom. These coins are sometimes referred to as gems, and this piece will walk you through factors you will need to consider in order to spot these gems.
A gem is usually a highly undervalued coin. All analyses point to the large potential of these coins to offer massive returns, but their prices remain relatively low for the moment. This might be due to low publicity, issues in fundamental data and information, or maybe even the way its roadmap is structured according to its whitepaper. With all these in mind, it would do you a world of good to understand that crypto gems are hard to come by.
How then are you able to spot the proverbial diamonds in the rough?
- VOLUME: Trading volume considers the values behind completed transactions of the gem. It is basically the data gauging how often and how much the coin is traded. More often than not, gems usually sport rather low volumes. This does not necessarily mean their trading volumes are completely negligible, but rather, it is much lower than what a coin of that caliber should normally command.
This usually causes it to maintain a low value range, allowing alert investors to fill up their bags. With popularity comes a spike in volume. As the price steadily increases with the volume, new investors buy more into the market, increasing volume and price even further.
- SUPPLY STRUCTURE: This is the part where the investor examines the supply methodology of the asset. The more efficient and structured the supply chain is, the better the coin’s popularity with investors. The supply chain could be billed to operate a deflationary distribution model where the coin is designed to have a finite supply quantity, just like Bitcoin.
This ensures scarcity and subsequently value. However, not all gems are deflationary. They could very much be inflationary where supply is designed to increase progressively. Gems of this model often tend to introduce periodic burning though, to keep the supply under control.
- MARKET CAP: For a coin to qualify as a gem, it must be undervalued. This would mean it would possess a relatively low market cap, with a potential for attaining much more. This is how it stays true to the market cycle, which has the asset begin at the accumulation stage. It is paramount to consider factors like market cap in context, because not all coins with low market caps are gems.
- FUNDAMENTALS: Fundamental research involves assessing the microeconomic and macroeconomic factors affecting the value of an asset directly or indirectly. Fundamentals include information such as the parent project of the asset, the team behind it, amongst others. The stronger, more positive, and more efficient these factors prove to be, the higher the coin’s chances of blowing up.
This way, it is much easier to get a quick idea of whether or not a coin is overvalued or undervalued. Gems are normally undervalued, incredibly so. This presupposes that their fundamentals suggest they should be going for a much higher value than they currently are. An important fundamental is the asset’s utility.
When the asset has a strong utility such as it being a token, it has a big chance of becoming very valuable because it will be in constant demand to meet its utility purpose. This is the case with Binance Coin ($BNB), which has a lot of utility on the Binance Smart Chain that makes it one of the most valuable assets in the world.
Bearing all these in mind, you can now begin digging for your crypto gems on a trustworthy and qualitative exchange, such as Binance. You can begin your quest for wealth on Binance today with just a few clicks. Sign up using this link and you’re all set to explore the biggest gem deposit in the cryptocurrency space.
Written By Owolabi Jeremy; Binance Ambassador
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