When it comes to choosing new tokens for crypto portfolio diversification, finding the right assets is only half of the battle.

With thousands of new tokens regularly added to the list of new cryptocurrencies, just gut instinct is never enough — you need to think globally and focus on long-term investment strategies for crypto and careful risk management.

Because hype is always short-lived, think long-term, like all smart investors do!

In this guide, we are going to break down on how to evaluate new cryptocurrencies — tools to use for token research and considerations to notice any red flags and stop become making mistakes.

Crypto Research Tools That Help You Find Worthy Crypto Assets

First and foremost, we should stress cryptocurrency exchanges, not just any exchange, but those large and well-known platforms that conduct listings for new tokens regularly. The thing is that they only list new coins after thoroughly checking them across multiple criteria:

• team transparency;
• token utility and real use;
• supply structure, tokenomics;
• smart contract audits;
• compliance;
• community and ecosystem;
• backers.

Thus, before a token gets listed, it’s always evaluated by the platform itself, making it a reliable source for search.

Next come Initial coin offerings (ICO). Both highly risky and rewarding ventures. During the 2018 bull run, ICOs were the primary fundraising method for crypto startups. Today ICOs are used for launching new crypto projects independently of centralized crypto exchanges. On ICOs, you have a higher chance of getting tokens at a lower price before they become popular. The main advantage is to jump into a project before the crowd. However, the risks are higher.

Data aggregators are another option for finding new cryptocurrencies. Take, for example, CoinMarketCap which shows the list of new tokens with their rates and trade volume. Using such kind of services may help you understand if the project is trusted by investors.

Social media — that’s what we must never ignore, for there’s nothing in today’s world that doesn’t happen on X (Twitter). Due to social media, we get information quickly. On X, you can find the information about crypto developers and project founders, read their tweets, see how they interact with their community, post updates, etc. Moreover, you may monitor hashtags like #ICO or #crypto and receive all the information on this topic, stay active in threads, and generally see the level of community engagement in this or that crypto project.

If you don’t feel like engaging in crypto investments directly, a good option is Exchange-Traded Funds (ETFs). The most prominent Chicago Mercantile Exchange (CME) offers futures of BTC and ETH, which is the popular way to participate in the cryptocurrency market, but indirectly.

How to Evaluate New Cryptocurrencies?

Separating real gems from short-lived hype tokens requires a sharp eye and crypto market analysis. Otherwise, if you succumb to hype and invest in tokens with no investigation beforehand, that will look like gaming, which is far from strategic investing.

Consider the following:

1. The team behind the project. Note that reputable founders with a rich background in blockchain technology (for example, former workers in giant companies or participants in world-renowned crypto projects) definitely adds credibility. Red flag: anonymous founders with no background, hidden history, unverified teams, etc.
2. Use cases. A token you invest in should represent real utility, like solving specific problems (from DeFi to cross-chain operability). Important that it should not be a copycat token repeating an already existing popular project. Red flag: no utility. In this sense, meme coins are at risk. While they gain popularity fast, since there’s no utility, it fades same quickly.
3. Supply. Actually, when evaluating a token, tokenomics and supply are among the first things to consider. First of all, tokenomics should be. Second, it must be clearly structured so that you have a grasp of the token supply, token allocation (and in what percentage), any burning mechanisms, etc. Red flag: Poorly structured tokenomics means the token is easy for the founders to manipulate themselves.
4. Community. Like we mentioned before, the way the community is engaged on social media is a litmus test for tokens’ long-term potential. See if there are active discussions on X and Discord, GitHub developments, any AMA sessions, updates and token news. If all of these are present, the token is worth attention. Red flag: “dead” social media, low communication, zero participation from the founders.

By carefully evaluating these factors, you may identify really worthy coins and filter those called rug pull, for they will likely raise funds and ride off into the sunset, leaving you holding the bag.

To wrap up this guide, you have all the tools in hand to evaluate new tokens and tell the difference between really worthy investment options and scams to avoid at all costs. Use reliable platforms and crypto exchanges, conduct due diligence, and never be hooked by innovations, hype, and speculations. Approach cryptocurrency investment with a cold head and with a strategic focus.