crypto moonshot.

When Bitcoin was created in 2009, it was just a vague digital currency that nobody really cared about. However, the coin would pioneer a globally acclaimed industry that has churned out more millionaires in 10 years than many other sectors.

In fact, analytics from BitInfoCharts shows that as of April 2021, there were over 80,000 bitcoin millionaires around the world. Also, it is believed that a significant percentage of millennial millionaires have made their money from crypto. Its therefore an asset class worth looking at.

In case you missed out on the massive growth in crypto over the last decade, no need to worry. The industry is evolving fast and there will be opportunities to make huge returns with these coins.

In this post, we are going to show you how to find the next big crypto moonshot and give you additional info that will help you make informed crypto investments in the future.

What is a Crypto Moonshot

The term ‘moonshot’ is actually not a crypto-specific buzzword. It’s something that has existed for decades largely in the tech space. In essence, a moonshot refers to a groundbreaking project, often highly ambitious, designed to achieve ultimate dominance in a specific sector.

Bitcoin High Growth
Bitcoin. Source:financebrokerage.com

Moonshots tend to be exploratory projects where potential future risks are either unknown or significantly outbalanced by the potential opportunity. Also, a tech moonshot aims to be a pioneering new invention with massive impact.

Now in crypto, the term moonshot is used in a relatively similar context. It refers to crypto projects with significant potential to achieve huge results or returns within a short time.

What Are the Characteristics of Crypto Moonshots

A crypto moonshot is often defined by certain unique attributes. Please keep in mind that these attributes are based on the general characteristics of previous moonshots. They are by no means designed to be investment advice. So, let’s get started.

Crypto moonshots
Crypto in 2022: Source: simplilearn.com

First, a crypto moonshot will typically be a low-cap coin. This means that the projects are yet to receive, or have received, very little capital injection from public investors. Secondly, crypto moonshots tend to be relatively unknown.

Even in cases where the coins are already in the public domain, they rarely get a lot of attention from average crypto investors.

A crypto moonshot also tends to deliver huge profits within a short period. A good example here would be Shiba Inu, a meme coin that must have captured your attention at some point.

If, for example, you invested just $100 when SHIB came out in August 2020, your investment would be worth $5.9 million in just 5 months. That’s a return of nearly 60,000x.

Finally, a crypto moonshot will often peak, crash, and then start all over again. It’s therefore very important to know when to get in, and when to get out.

Why Invest in Cryptocurrencies?

Different people of course have their reasons why they are investing in crypto. Some are just passionate and excited about these technologies while others see an opportunity to make returns.

Crypto investing
Crypto investing. Source: CNET

Let’s also not forget the huge number of investors who are in crypto because of the fear of missing out or FOMO. Nonetheless, there are certain proven reasons why you should consider investments in crypto. Here are some of them.

Unbelievable Returns

Ever since its launch about a decade, ago, the crypto asset class has delivered way better returns compared to all traditional assets. According to this analysis by Smart Valor, Bitcoin was the best-performing asset of the last decade.

On average, BTC returned 10x more profit than the NASDAQ 100, a stock index dominated by mega-cap tech companies. Although crypto has had periods of boom, burst, and massive volatility, from a long-term point of view, it has been a relatively steady asset.

It’s Not That Hard

There is always this misconception that you need to be a tech-savvy person to invest in crypto. While the workings of blockchains and related technologies can be a bit technical to understand, making the actual investment is actually very simple.

You just need to set up an account with any of the leading central exchanges, deposit funds, and buy what you need. This often takes less than 5 minutes.

Crypto Is Too Big to Fail

Although this is still a point of contention, there is enough consensus among industry experts that Bitcoin, and in general crypto, has become too big to fail.

Crypto coins
Crypto coins. Source: Entrepreneur.com

Of course, there are risks in the industry. But over the last decade, the crypto market has reached a total valuation of over $1 trillion. This should give any investor the confidence that the industry is here to stay.

Widespread Adoption

The adoption of crypto and blockchain technology has been growing. In fact, according to research by Triple A and Grandview, over 300 million people used or owned crypto currency in 2021. The report also estimates that the blockchain industry will grow at an average annual rate of 85% between 2022 and 2030.

Blockchain Spending
Blockchain Spending . Source: Statista

This represents a huge push to make crypto a more globally widely accepted phenomenon. Also, blockchain spending, as shown by the graph above from Statista, will hit $19 billion a year by 2024.

What To Consider Before Investing in A Crypto Moonshot

There is nobody who knows what the future holds. It’s possible to invest your money in something you thought was going to be huge only to be disappointed in the end.

So, it is important to always be ready for any outcome. Here are some factors you should consider before you make any investments in crypto moonshots:

What is Your Risk Tolerance

Every investment, be it in crypto, real estate, stocks, or anything else, comes with a degree of risk. As an investor, you must know how much risk you are willing to take to achieve a return.

 

Risk refers to the maximum amount of money you stand to lose if your investments don’t go according to plan. So, for example, if you invest $100 in Bitcoin today (Not a recommendation), the highest amount of money you lose if bitcoin crashes to zero is $100. Having said that, risk tolerance is then defined as the total amount of money you can comfortably raise without any fear of losing it.

Risk can be significantly magnified if you are trading with leverage. This type of trading allows you to use borrowed capital from your exchange to enter temporary positions. Some exchanges can offer 100x your initial investment.

Crypto Crash
Bitcoin Bubble. Source: Forbes

For instance, if you raise $100, your exchange will avail $100,000 in borrowed capital to help you maximize your returns.  In leveraged crypto trading, it is possible to lose more than you put up. Also, leveraged trading is often suited for institutional investors with a deep understanding of risk dynamics in the market.

Consider the Timing

Timing is very crucial when investing in a crypto moonshot. Ideally, you want to get in as early as possible when the project is relatively undervalued. This allows you to take less risk while acquiring a significant number of coins.

Make sure you also employ creative capital management when investing in these projects. For example, you can start with a smaller investment and then build up your portfolio depending on the major milestones the project reports.

 crypto ecosystem
Crypto ecosystem. Source: AAX Academy

After all, most projects have a roadmap that spells out how they intend to scale. Every achievement in the roadmap can be used as a cue to add more investments.

The Boom and Burst Cycle

Based on the crypto moonshots we have seen over the last decade, there is always one dominant characteristic. These projects will go through a period of boom where they return huge profits for investors. However, at some point, they will start to stagnate before crashing.

Most coins will then recover but others never come back. So, before you invest in any crypto moonshot, ask yourself if it has already gone through the boom and bust cycle.

Do not invest in projects that have already boomed with the hope that they will boom again. Unless the underlying fundamentals make sense from an investment point of view, it is better to look for other crypto moonshot opportunities.

What Do You Know About the Crypto Moonshot?

Finally, it is important to ask yourself what you know about this project you are about to invest in. Are you investing because of the hype or do you already know that there is enough potential there to unlock a lot of value?

In most cases, it can be hard finding genuine info about crypto projects, especially if they are new. But any investment in crypto moonshots should be as informed as possible. Besides, there are so many ways to do research these days. Here are the most important questions to answer as you evaluate the opportunity:

  • Who are the founders of the project and what is their background?
  • What does the crypto project hope to solve once it is fully operational?
  • Is there any other project out there like it? How has it grown since launch and how do both compare?
  • What is the long-term vision of this crypto project?
  • Does it have the team, infrastructure, and capital needed to reach that vision?

How to Spot the Next Crypto Moonshot: 9 Tips

Now that we have given a bit of background on crypto moonshots and what they are, the next thing is to provide a detailed step-by-step guide on how to actually identify this project early.

Shiba Inu
Shiba Inu. Source: Zipmex.com

Please note that this is not investment advice and ultimately, you will be solely responsible for the investments that you make. But the guide below will at least help you make informed choices. Here we go:

#1. Keep an Eye on ICOs

The best way to make 100x or more in crypto is to invest in promising early-stage crypto projects. Now, this does not mean all early-stage projects have the potential to make you rich. There is still a combination of other factors that you need to keep in mind.

However, keeping an eye on ICOs or initial coin offerings can help you narrow down your investment opportunities significantly. An ICO basically refers to the first time a coin is offered to the public.

ICOs
Crypto ICOs. Source: CoinDesk

Think of it as an initial public offering only that, instead of buying stocks, you will be buying coins. In most cases, ICOs allow you to buy into a project at a significantly lower price compared to a token that has already existed in the market for a long time.

#2. Check The List of Early-Stage Investors

It is also possible to rate the authenticity of a crypto project by looking at the early-stage investors. These are typically folks who have already taken a risk on the project and may have proprietary information that is not yet in the public domain.

The crypto industry has individual investors and venture capital firms. However, it is often better to focus more on venture capital than on individual buyers. If a project has attracted money from some of the most notable venture capital firms, they are likely legit.

#3. Fully Diluted Valuation at TGE Relative to Market Cap

The Fully Diluted Valuation or FDV is the market capitalization of all coins in circulation. Now, before we explain how the metric works, it is important to highlight how crypto tokens generally raise money. In most cases, new projects will raise money through a private token pre-sale.

For example, let’s say we have a P2E project that wants to raise capital, right? The project can decide to offer tokens to private investors as a way of doing it. The offer comes before the token generation event or TGE.

A TGE is the official launch of the project’s token and it offers the public the first real opportunity to buy into the crypto. So, here is how you use FDV before TGE to assess the viability of a project.

Go to the roadmap and check the total token supply. This is typically a limited number. After that, check the total number of tokens already given to early-stage investors, the team, and other persons before the TGE.

If the FDV is significantly higher than the market capitalization at TGE, it means that as an investor you are exposed to significant supply risks. In other words, if early-stage investors decide to sell, the impact on the token’s value will be huge. On the other hand, if FDV is relatively lower compared to the market cap, it means that supply risks are reduced.

#4. Total Money Raised in Private Capital

You may also need to assess how much a crypto project has raised in private capital to see if there are any opportunities for you. Now, the first instinct would be to choose a token with the highest private capital raised.

Raising Capital
Raising Capital. Source: businessfirstfamily.com

This is not always going to work. You see, every time a crypto project raises money through token pre-sales, it increases the chance that the FDV relative to the market cap will be very high.

For this reason, it is advisable to focus on projects that have raised less money through private pre-sales. That way, it will be easier to invest relatively smaller amounts of capital and still get a better return.

#5. Be Aware of Whale Holdings

A whale is a person who holds a huge amount of cryptocurrency. This gives them the power to control the price significantly. For instance, if you notice that more than 30% of the total token supply is held by just a few wallets, then you should probably pass.

Crypto Whales.
Crypto Whales. Source: Naira Metrics

It means the moment these wallets decide to sell, the volatility around the coin will be huge. To make it worse, if the whales are the founders or members of the team behind the project, don’t invest your money.

This of course doesn’t necessarily mean that all whales are bad. But you would rather be invested in a crypto moonshot where the risk is spread across so many different wallets. This adds an aura of price stability.

#6. Check The DEX and CEX Listing Plan

If you look at the history of crypto moonshots, most of these coins tend to skyrocket when they are listed in major exchanges. As you know, the average person will typically buy coins from an exchange.

Coin Listing
Coin Listing. Source: Binance

It’s the easiest way to do it and besides, most coins that drop in these major exchanges are extremely vetted. So, it is advisable to have a clear picture of when the coins will list, where they will list, and whether you are ready to buy in when this happens.

Typically, listings will start on decentralized exchanges before they move towards the bigger more liquid centralized exchanges. It would be much more beneficial if you buy at the DEX listing. However, please note that DEXs may not offer the same level of scrutiny and vetting as centralized exchanges.

#7. Comprehensive Roadmap Scan

Every crypto project will launch with a whitepaper. This is a detailed explanation of what the project is about, the team behind it, and the roadmap that it intends to follow.

Whitepapers are public information and you can access them anytime you want. Make sure you read carefully through this document and answer the following questions:

  • How will this project contribute to the broader crypto industry?
  • How does it align with the hottest trends in crypto right now?
  • What does the project hope to achieve and how is it significant?
  • Does the project have the team, technical expertise, and resource to fulfill its goals?
  • How have other similar projects like this performed, if any?

#8. Active Crypto Moonshot Community

It is also important to make sure that the project has an active community around it. And when we say active, we don’t mean the number of followers on Twitter or members on discord.

Crypto community
Crypto community. Source: NewsBTC

It’s all about the level of engagement. Engagement means that people are sharing posts, they are commenting, asking questions, and all these things. This will help you determine how excited fans are about the project and whether they are all in or not.

#9. Follow The Trends

Finally, if you want to make 100x on any crypto moonshot, make sure you invest in projects that align with some of the hottest trends in the crypto market. For example, at the time of publishing this post, NFT-based play-to-earn games and the metaverse were dominating conversations around crypto.

We have seen massive early-stage investments in exciting NFT and P2E projects. There is also a lot of excitement around these projects. Some of the biggest crypto moonshots will likely come from these trends.

So, as a golden rule, always make sure you are plugged into the crypto industry so that you can be able to pick up these trends and take advantage of them.

How To Manage Risk When Investing in Crypto Moonshots

Not all crypto moonshot opportunities will achieve the kind of returns that you want. In fact, crypto moonshots are often high-risk high-reward investments. So, the most important thing is to always hope for the best while preparing for the worse.

This is where the idea of managing risks is very important. Here are some tips that should help you do this like a professional:

Invest What You Can Afford to Lose

The golden rule in crypto investing is to risk capital you have no problem losing. Do not mortgage your house or spend all your entire savings on crypto. There are two reasons why we always advise investors to only use the money they don’t mind losing.

How to invest in crypto
Investing in Crypto. Source SwissBorg

First, there have been many cases of promising crypto projects that have gone to dust just overnight. Just read about Terra Luna and you will see what we mean.  So, imagine if you had invested all your money in such a project? The losses will be life-changing.

Secondly, when you invest money you can afford to lose, it takes away the anxiety. This means that you can be able to make rational decisions and keep your mind focused on the ultimate price. After all, if your entire life is not riding on that one trade, you can afford to chill out and let the coin shoot up or recover after an initial fall.

Avoid Using Leverage

Leveraged trading is the idea of using borrowed capital to enter large investment positions that you wouldn’t otherwise be able to. Most major crypto exchanges offer leveraged trading to a certain degree.

 Leverage in Crypto Trading
Leverage in Crypto Trading. Source: IF Markets

The problem with using leverage is this. Although it can significantly magnify your returns, the risk of losing money rapidly is very high.

Also, unlike using your own money where you control maximum risk, it is possible to lose more than you put up with leveraged trading. You do not need that kind of downside exposure with high-risk crypto projects.

Diversify the Asset Pool

There will be several good investment opportunities in crypto at any given time. But not all will eventually turn out to be the ultimate crypto moonshot. It is therefore important to spread your risk across a diversified pool of assets.

So, instead of putting all your money into one of two projects, make sure your portfolio has at least 6 coins. This means that even if somehow one or two of the projects fails, you still have an opportunity to recover your capital from the other assets.

Use Dollar-cost Averaging

Dollar-cost averaging is a capital management strategy that allows you to invest fixed amounts of money regularly. You see, while you can do a lot of research and analysis about investment opportunities, you will never be able to accurately time the market.

So, instead of going all in at once, you can allocate your capital into small chunks and invest it at different times based on the prevailing trends.

Dollar-cost averaging is considered one of the safest strategies in crypto since it allows you to get long-term exposure to an asset without spending all your capital at once.

Important Tools to Use When Analysing A Crypto Moonshot

Finding data and information about any crypto project is not always a given. Most people will probably start with a Google search but you still have to sort out this sea of information to find what you need.

So, for this guide, we thought we should give you some tools you can use to research crypto moonshot projects.

ICOs and IDOs

  • ICO Drops
  • ICO Bench
  • ICO Marks
  • Coin Schedule
  • ICO Rating

Research and Analytics

  • Cypher Hunter
  • Messari
  • CoinMarketCap
  • Cryptoslate
  • Coin Dance

How to Avoid Rug Pulls

Although the crypto market is filled with many great opportunities to make money, it’s very important to move with a lot of caution.

There’ve been many victims of crypto rug pulls over the years as the industry continues to attract its fair share of bad actors. Before we get to the points of how to avoid this, let’s broadly explain what a rug pull is.

Rug pull crypto
Rug pull crypto. Source: Paxful

This is simply a form of fraud where a developer creates a project, generates interest, raises money, and eventually abandons it with investor money already pumped in.

While some rug pulls can be huge and highly publicized like the OneCoin fraud, others are relatively smaller and much more difficult to decern. Nonetheless, here are some tips to avoid this:

Check Liquidity

Liquidity refers to the total value of tokens that can be traded at any given time. Typically, newer projects will have lower liquidity compared to older ones but this is not always the case.

Cryptocurrency Liquidity
Cryptocurrency Liquidity. Source: Technoloader

Nonetheless, avoid low liquidity coins as much as possible. While this does not necessarily mean they are scams, low liquidity may suggest that one single person or just a few has significant control over the token circulation. If they decide to sell or cash out, it could easily tank the entire value of the coin.

Social Media Hype

The hype surrounding coins can be genuine or manufactured. For example, if we are talking about an exciting product that has real potential, the social media excitement will typically be organic.

In essence, there will be a community of passionate fans around the project and subject matter experts who see its potential value.

Dogecoin
Dogecoin . Source: Outlook India

However, if you realize that the hype around a given coin is largely fuelled by paid influencers, you better think twice. In crypto, good projects will often advertise themselves.

Too Much Overselling on the Whitepaper

The primary goal of a white paper is to give prospective investors details about the project and the problems it wants to solve. Whitepapers are supposed to be educational only and they are not to any extent marketing materials.

If you realize that a whitepaper is trying to generate an emotional response from you as opposed to educating you about the project, something is fishy. Whitepapers are supposed to explain the opportunity using data, research, and other evidence.

Using FOMO (Fear of Missing Out) and making ambitious promises of global dominance without any data to support those conclusions is a bad sign.

Analyze The Smart Contract Code

Now, this one may sound a bit technical for the average person but it’s not that hard. There are websites these days that can allow you to audit a blockchain code and flag any suspicious activities.

Smart Contracts
Smart Contracts. Source: Simplilearn

For example, head to RugDoc.IO and search for the coin in question. Here, you are going to get an audit report with a risk score. You may also want to check out Token Sniffer.

Now, this one is not necessarily a rug pull detector but it basically gives a similarity analysis among tokens. If a coin is between 80 – 100% similar to another project out there, it means that it is not unique at all.

Check The TVL

TVL is defined as the total value of coins invested in a project. The metric is quoted in USD and is designed to give you a rough idea of just how credible a coin is.

For example, blue chip tokens will typically have a TVL of billions of dollars. Mid-level coins on the other hand could range between $200 million – $1 Billion. But if for some reason the TVL in your preferred crypto moonshot is significantly lower, it could be a sign that some monkey business is going on.

In Conclusion

Crypto moonshots can give you a once-in-a-lifetime opportunity to make 100x or more from your initial investment. But with high rewards also comes high risk. Before you invest in a crypto asset, do your research and consider if you are ready to take on the risk associated with that particular project. As long as you are comfortable with the risk, then you can invest money and be patient enough to see how things go.

Any investment/financial opinions expressed by Play to Earn Diary are not recommendations. Our content is for educational purposes only. If you plan to invest in any game or cryptocurrency then please do your own research and only spend what you can afford to lose.

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