I recently got a message that a particular currency has increased by 100% in last 3 days. Should I invest in it? It may seem highly lucrative to invest in low cap coins which increase 100% in days time but the issue is not every currency listed on an exchange is investable.
You need to be very careful in choosing the Cryptocurrencies you will invest in. Often the currencies will write fancy keywords in their homepage but there is no development team or founders are not expereinced enough.
Do your research before getting burned with seemingly great and fast growing altcoins.
In Mastering Bitcoin by Andreas M. Antonopoulos, he says that new investors should ask these questions (quoted):
- Does the alt coin introduce a significant innovation?
- Is the difference compelling enough to attract new users away from bitcoin?
- Does the alt coin address an interesting niche market or application?
- What is the total market capitalization of the alt coin? [beware of phony cap stats from pre-mines and low trading volume daily gains]
- How many estimated users/wallets does the alt coin have?
- How many merchants accept the alt?
- How many daily transactions (volume) are executed on the alt coin?
- How much value is transacted daily?
There will be many FOMO moments and you will be pained to see unknown currencies rising by 100%. Its better to get reasonable return and not lose your money than become victim of pump-dump of coins
