A Guide to do your own Research (DYOR) for Crypto Trading

How to DYOR in Crypto Trading

The crypto market is highly time-sensitive and volatile. Considering this fact, putting in time and effort to do your own research (DYOR) in crypto is the first step toward becoming a successful crypto trader. 

But what does DYOR mean in crypto? DYOR stands for Do Your Own Research which is a commonly used acronym over the internet. In terms of crypto, DYOR is a way to suggest carrying out research on every level before investing as throughout the internet misinformation spreads like wildfire.

DYOR is often used as a disclaimer when crypto influencers and traders make public posts or share their market analyses on social media platforms. In crypto, DYOR reduces the number of uninformed investors and encourages them to understand a cryptocurrency before plunging in. This way they can know precisely why they are buying or supporting that project. 

Before DYOR in crypto, there is some prerequisite knowledge that you need, or else you will get tangled up among numerous sources advising investing tactics and predicting the crypto market. 

How to DYOR in crypto?

Doing your own research, or let’s say DYOR before dipping your toes in the crypto market, is tricky and confusing for beginners. After knowing that doing research is a part you can’t skip, you must be wondering where to begin, which sources should you trust and how much research is actually needed to ace the crypto game?

Always proceed cautiously when making an investment you don’t fully comprehend, and keep an eye out for further great opportunities. This makes the research much more fascinating.

While we have created a step-by-step process on how to go about DYOR in crypto, you can run down the list below to imagine the bigger picture of your research efforts.

  1. Fundamental Analysis
  2. Technical Analysis
  3. Social media Analysis
  4. On-chain Analysis

DYOR in crypto requires information gathering and filtering, which is not easy when the crypto market is full of red flags that are not easy to notice. DYOR makes you aware of what’s happening in the crypto community as well as understanding the tools and sources to help you with the right decision making. 

All these analysis practices when combined can help you interpret market data and give you various aspects which will guide your trading. 

Below is the list of some of the best analysis practices for traders of all levels to do their research. 

Fundamental Analysis

The fundamental crypto analysis is an evaluation strategy that helps in determining the fair value of an asset on the market. This practice involves reviewing business practices, whitepapers, roadmaps, marketing strategies, teams, tokenomics, network activity, development, etc. 

Fundamental analysis (FA) is the first step of DYOR in crypto as it determines whether a project is undervalued or overvalued. FA also includes monitoring crypto market data such as circulating supply, token emissions, volume, distributions for team tokens, and so on. 

Additionally, evaluating the productivity and performance of the crypto asset or project includes market capitalization, liquidity, trading volume, and supply mechanism. 

Once you are done with this extensive yet essential aspect of the DYOR process, you can now compare various crypto projects against their competitors. This way you can analyze potential investment opportunities.

Technical Analysis

The second step to take your DYOR in crypto to the next level is through technical analysis (TA). In most cases, when you spot trading in cryptos by looking at historical price movements, you can identify a strategy where the prices of the crypto are available at a reduced rate. 

TA can help when you buy or sell crypto for a short or long period. As investors and traders, it becomes necessary to assess the market at the right time. Many times when investors are trading in crypto with some amount of leverage in the form of an extended line of credit from the crypto exchange or bank, their money gets stuck due to unplanned investing.

To avoid getting burdened by the losses as well as the additional interest that needs to be paid on the borrowed funds, you need to make sure one does complete DYOR for proper crypto market analysis. 

So, go ahead and stare at charts, look for candle patterns, check up indicators, and test new trading tactics as there is always something new to learn.

Social Media Analysis

Determining the source of trustworthy information is extremely necessary as everyone in the crypto space, including those with zero authority seems to have an opinion. Being selective is the only approach to save yourself the trouble of getting entangled in a huge pile of info coming from all directions. 

Though there are many social media platforms where the crypto community is quite active, you still ought to DYOR as Sybil attacks are very common on such platforms. People with malicious intent can quickly create fake accounts in an attempt to trick investors into purchasing crypto based on a “popular” post on social media.

To dive into every type of info source in crypto, you must check various social media platforms to get a more holistic picture of crypto investment.

One of the best things to do before making a decision is to blend in with the crypto community on different social media platforms and observe the activity and trends on a daily basis. 

Over time you will definitely find some favorite Twitter or youtube personalities. While finding someone who seems genuine and unbiased in their opinion is great, know that getting your info from one source is still going to backfire. 

Also, not all advice from social media influencers is created equal, especially in the world of crypto. A crucial part of DYOR is to not blindly follow any tip or prediction you see on social media to make an investment decision. 

The internet is full of random crypto trading advice, a lot of which is just false to hype up the project which many times result in dump schemes, shilling, and Sybil attacks. 

DYOR in crypto is all about using a variety of sources and tools to broaden your perspective. The more mediums and crypto influencers you connect with, the more confident you will feel in coming to your own conclusion. Remember, it’s mostly about the hype. The crypto crowd can make or break any asset in a matter of time.

On-Chain Analysis

For the on-chain analysis, you have to complete the above-mentioned analysis as this aspect of DYOR in crypto is solely based on blockchain data.

To do this, one must analyze on-chain metrics such as transaction count, transaction value, hash rate, transaction fees, staked amount, status, and active addresses. Though the blockchain records all the information about the latest activity, it remains hard to understand by most traders because the blockchain doesn’t graph, analyze or visualize on-chain data. 

Hence, there are on-chain data analysis platforms that provide statistics on the network’s health in real-time. Speculating on-chain metrics help you analyze market and investor behavior. For example, think of market capitalization as the participation of all traders and this could encourage the participation of long-term investors.

All this information is displayed in simple charts that traders can analyze to view differently on chain metrics. On-chain data analysis is valuable for both smart traders and novice traders as it gives the exact facts and figures to better predict the market pattern.

Also Read: How Crypto Futures Trading Differs From Spot Crypto Trading?

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