- Bitget and Nansen write a report on how to spot the best new tokens.
- Various community engagement metrics seem most useful.
- Different metrics work with new and established tokens.
With thousands of tokens launched daily, traders were always looking for ways to find the few with the most potential. Traders that could do so could make millions in the lucrative altcoin market.
Most recently, Crypto exchange Bitget and blockchain analytics firm Nansen released a report with insights into this process. Its purpose was to enable Bitget to pick which tokens it would list for its users. However, its conclusions are very useful for traders.
Bitget Reveals Strategy for Picking Early-Stage Tokens
Picking the most promising tokens out of thousands is a challenge for traders. On Monday, July 29, Bitget, in collaboration with Nansen, released on picking the tokens most likely to win.
Crypto exchanges face a similar problem when deciding which tokens to list to ensure their users can access the best tokens. Since April 2024, Bitget has listed over 180 tokens, many of which are too early to have reliable on-chain metrics. This means they mostly rely on off-chain metrics, such as community strength, technological innovation, and tokenomics.
Criteria include over 4,000 airdrop participants while circulating tokens need volumes of $1 million and at least 30 transactions per hour. The exchange also looks at community strength, where projects need at least 10,000 followers on Twitter and 5,000 active members on Discord or Telegram.
The exchange also looks at tokenomics. The fully diluted valuation (FDV) for new tokens should not exceed 20 times the financing amount. Moreover, it also looks at investor reputation and token unlock schedules.
These criteria offer valuable insights to traders, as they could use similar criteria to analyze early-stage tokens. For more late-stage tokens, Nansen revealed their analysis in the report.
Nansen Looks at Established Tokens, Revealing Key Metric
Nansen uses several fundamental on-chain metrics to understand a blockchain’s economic activity and potential and its associated tokens. Their results, however, were not as consistent when it came to all tokens.
There was a significant correlation between on-chain metrics (like TVL and fees) and token prices for Ethereum and its layer-2 scaling chains. As TVL and fees increase, the price of tokens like ETH, MATIC (Polygon), and others tend to rise.
Solana and Avalanche showed some correlation with certain metrics, but the relationships were less consistent. Chains like Fantom, Celo, and Tron did not show a strong correlation between on-chain metrics and token prices.
On the Flipside
- While social sentiment correlated with weekly token price movements, it was less significant in predicting future prices than on-chain metrics like TVL and fees.
- Evaluating early-stage tokens can be challenging due to limited on-chain data. This necessitates a reliance on off-chain metrics and thorough assessments of community strength and market traction.
Why This Matters
Understanding the methodologies and criteria used by exchanges like Bitget and analytics platforms like Nansen is crucial for traders and investors. This knowledge enables them to make better decisions.
Read more about Nansen’s analytics work:
Nansen Uncovers DBS Bank’s $650 Million Ether Holdings
Read more about what BlackRock thinks about altcoin ETFs:
Will Solana, XRP ETFs Become a Reality? BlackRock Tempers Expectations
