How To Evaluate Projects In A Bear Market?

By November 3, 2022November 5th, 20223 minute read

No matter whether you’re a part of the crypto space or not, you must be aware of the terms like “bear market” and “crypto winter” that are doing rounds. And the bear market doesn’t seem to be ending any time soon.

The crypto bear markets have the potential to knock down your portfolio value with an intention to stay longer than you expect. Looking at the brighter side, it gives seasoned investors enough time to take a step back and re-evaluate their portfolio and other projects that can be proved beneficial financially. The newbie investors who were skeptical about taking the first step into the crypto market also get enough time to do their research and have the confidence to thrive when the market turns towards the bull run.

 Keeping the current situation in mind, we have done some digging for you on how you can evaluate projects to invest in during the bear market. You need to get answers to specific questions that can be crucial for you.

Let’s have a look at the questions that can be helpful for you!

Idea

The idea is the seed that is planted before it grows into a matured plant. Be very aware and try to get the answers to the following questions.

  • Is it a blazing growth strategy?
  • How innovative is it?
  • At what level will it disrupt the industries?
  • How crowded is the space? How far ahead do they need to be to dominate the market?
  • Do they have a viable use case and address real-world issues?
  • Can they create a significant network effect?

Price

Pricing of the project plays a vital role in launching it. What’s your current price? How much can it pump? Will it give you the desired ROI? You can consider the following questions related to pricing to evaluate your desired project.

  • Is it pumping presently?
  • Is it building up?
  • Does the market cap have the potential to grow and still deliver the desired ROI?
  • Does the market cap make sense?
  • Given the current pricing, what is the risk/reward?

Liquidity

Liquidity is a measure of how quickly your crypto assets can be converted into fiat currency—the higher the liquidity, the better the trading volume. The questions below can be considered when you want to check the project’s liquidity.

  • Where can I purchase it?
  • Is there sufficient liquidity to take and quit the size of positions that you want?

Team

A team builds the foundation of anything, may it be a crypto project or any organization. Get detailed answers to the following questions if you are seriously considering investing in your desired project.

  • Is the team mysterious?
  • Do they have reliable partners or supporters?
  • Is the team equipped with the necessary skills and personnel to fulfill its potential?
  • Do the team and backers have solid ties to the crypto community or the mainstream industry they are pursuing?
  • Do they regularly provide updates to their community?
  • Do they have a sizable community?
  • Do they have sufficient resources and a marketing plan?

Technology

Having the technology in place can help build trust in the community. So, be sure about the authenticity and latest development in the crypto project. 

  • Have they undergone audits from several companies, and if vulnerabilities have been found, have they been immediately fixed?
  • Is there ongoing, active development?

Token

Last but not least, no project can exist without having a dedicated token. Check its utility and potential to provide timely ROIs to be benefitted from your chosen project. The following questions will help you in gathering more knowledge about your project’s token.

  • Examine the distribution, vesting schedules, supply-demand dynamics, and inflation (both short-term and long-term).
  • Is there a deflationary mechanism in action here?
  • Does the coin’s utility have the potential to generate long-term, stable demand?
  • Does demand for the token rise when the protocol is used more frequently?
  • Does the token concept permit rewards for holders?

Bottom line

The questions above are only for helping investors, and newbie investors choose their projects to invest in. Try to get answers to the maximum questions for a fruitful investment. Always DYOR!

Happy Trading! 

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
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Harshita Shrivastava

Harshita Shrivastava

Harshita Shrivastava is an Associate Content Writer with WazirX. She did her graduation in E-Commerce and loved the concept of Digital Marketing. With knowledge of SEO and Content Writing, she knows how to win her content game!

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