TheBreadmaker

TheBreadmaker

20-05-2022

22:44

Timing your entry can be one of the most important decisions when buying in DeFi. You should look at an array of indicators to help make your decision. Let’s take a look. 🧵 (1/33)

Location, Location, Location Just like in real estate it matters where the project’s location is. Projects on $AVAX are going to get more visibility & action than a project on $NEAR right now. (2/33)

This is important because we don’t want to get into a small project on a small chain with limited traders. We’re immediately hindering our investment. You might be thinking, “Well isn’t it good to be early?” (3/33)

In some situations it is good to be early. You might even have a % of your portfolio in very high risk investments but on average we want to see volume & newer/smaller projects on newer/smaller chains can’t give us this right away. (4/33)

Ecosystem What does the current ecosystem look like? Before the market was flooded with DAOs there was $OHM. Before the DAAS/NAAS wave there was $STRONG. Both of these projects had moments where they were incredible buys. A lot of investors made $$$ (5/33)

But as the DAO and DAAS/NAAS ecosystem exponentially grew the money gets more & more spread out. While there is a lot of money exchanged through these services it’s not enough to see the kind of growth we experienced before. (6/33)

Climate The climate of that ecosystem matters too. How do other investors feel? We see what is happening in DAAS/NAAS space. 2 months ago everyone was flying high on nodes. Now, most days, it’s quite depressing. (7/33)

When investors are happy they talk, which is free advertising for the projects. They bring in friends, followers, & unknowingly maybe the dude sitting quietly at the table behind them at lunch. When investors are depressed they don’t talk at all. (8/33)

Okay, so we’ve found the location with a great ecosystem & the climate is still bountiful. Now we need to find a project. The first thing we want to see is innovation. (9/33)

Back in the day there was an ad placed in the paper: “The secret to getting rich! Send $1 to this PO Box & in return I shall provide you with the secret to becoming a millionaire.” You happily pay $1 and in return you receive a hand-written note: (10/33)

“If you want to be rich put an ad in the paper requesting $1 be sent for the secrets of becoming a millionaire.” This of course is a money pyramid scheme and sadly, it worked for a lot of people. (11/33)

While I admit, this tactic was innovative & creative the first time it was used. Bravo to that individual & they deserve every penny they made. However, every individual who deployed this tactic afterwards just became another stone in the pyramid. (12/33)

If a project is an exact replica of another project the only thing different is the team. If that team isn’t innovating then why does that project exist? If a team of innovators put together a project would they be replicating a project to begin with? (13/33)

Innovation drives success. The most successful projects in crypto either solved problems, created new outcomes or were first to market. All of the above can lead to exponential growth in an investment. (14/33)

As stated though innovation starts with the team. You can’t have a successful and innovative project without a solid team operating behind it so once we find our project we need to study the team. (15/33)

When looking at a project’s team I like to see a diversity of skills & experience. A team of developers may be able to create a sweet looking end product but have no way of marketing it. (16/33)

Each project should be treated like a business. You need passionate individuals who know how to create, operate & support the product and then you need even more passionate people to sell it. (17/33)

When Apple started in Steve’s garage they had a genius developer & a genius marketer and all they lacked was money. If both Woz & Jobs were developers they may have spent all their time developing better & better products without any seeing the light of day. (18/33)

When evaluating a team pay attention to the details. Are they KYC’d? Are they doxxed? Do they have any work experience? If the answer is No to all 3 of these why do you feel comfortable handing them your money to manage? If you can’t answer that question then move on. (19/33)

DeFi is financial services. Most of these project owners are not financially stable themselves. Money changes people. With an Anon team we need to know that this kind of money won’t sway them to the dark side of rugging & evil scheming. (20/33)

We need to understand how the team handles challenging situations. How do they handle exploiters damaging their protocol along with an angry Discord community? How do they deal with stress and where does this project fall in their lives? All important ?’s (21/33)

We also need to know how the team handles success. Do they keep innovating? Or do they say, “We’ve made it!” and collect the paycheck? (22/33)

Don’t be afraid to ask other investors. Go to their community and ask for pros and cons. Read through previous team communications. Is it consistent or erratic behavior? (23/33)

Now we’ve got the project with the promising team in a ripe ecosystem in a blooming climate bursting with opportunity. Now it’s time to buy. Pull up the chart. (24/33)

It’s true that some Technical Analysis doesn’t apply in newer crypto projects. Those technical lines haven’t had time to build up into something coincidental. One indicator that does apply: Money Flow (25/33)

The "MFI" or Money Flow Index is a momentum based trading indicator that measures the money coming in and out of an asset. It’s similar to RSI but instead of measuring strength of the buyers/sellers it measurers their money. (26/33)

MFI can apply to a project as little as an hour old. Of course, those readings are not going to be as accurate as a week, month, year long project but it can still provide guidance. (27/33)

In the stock market traders also use the MFI to determine when investors sentiment changes from buying to selling and vice versa. The same can be applied to crypto. (28/33)

I’d share a chart as an example but I think it would be more powerful for you to see for yourself. In Dex Screener you can add an indicator by clicking the little cursive F at the top of a chart. Search “Money Flow” (29/33)

MFI will show below the chart. Here’s how to read it: If MFI is 20 or below = Oversold Oversold = Profit taking has occurred Could be a good time to buy. If MFI is 80 or above = Overbought Overbought = Time to take profits Wait for profit taking to occur then buy. (30/33)

Obviously, nothing is certain and the MFI will not play out every time but look at a dozen charts and see how well it identifies these areas. Remember, this is just a tool in your trader tool belt. (31/33)

You should never feel rushed into buying something. Decisions made under those conditions tend to lead to the worst outcomes. Take your time and choose your entry into the market. Don’t let the market choose it for you. (32/33)

TLDR; Timing is everything. Identifying the answer to these 6 questions can help you make a more informed decision. -Location -Ecosystem -Climate -Innovation -Team -Money Flow Index You can read the unrolled version of this thread here: (33/33)

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