In just over 21 days, meme cryptocurrency PEPE PEPE/USD is up more than 375,000 times, prompting a number of early investors to cash out.
While investing in meme coins is inherently dangerous, according to crypto analyst Miles Deutscher, there are several methods you can use to improve your chances of making money in an unpredictable market.
in one Twitter thread on Friday, German, who notes in his bio that “tweets are not financial advice”, wrote that meme coin performance depends on psychological rather than fundamental factors. In the so-called “castle-in-the-air theory,” investors try to predict price increases in the future rather than determine intrinsic value, he explained.
While Deutscher acknowledged that investing in meme coins is essentially a gamble, he shared five strategies that can help increase your chances of winning with meme coins:
– Use tools like DEX Tools to uncover top performing meme currencies gaining traction. Track which coins are performing and only invest “in memes that are gaining momentum,” the analyst tweeted.
– Check if the token has a “strong culture,” wrote Deutscher. A successful meme coin is usually built on a solid community. Monitor the performance of a token on social media through sites like LunarCrush and determine if the token is trending.
– Look at the basics, added Deutscher. Examine the tokenomics, the development team, and any potential dilution or burning processes behind the token. If you want to avoid “constant carpets and exploits”, use Token Sniffer to conduct an examination and bubble maps to evaluate the distribution of wallets.
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-Choose between rotating play or following the leader, the analyst wrote. While the rotation play is to invest in small-cap tokens that “emerge under a niche leader,” “new liquidity pulls to the leader first,” thereby “making the leader a better R/R game,” he tweeted.
– Follow the “smart money” wrote Deutscher. You can use resources like ether scan And LookOnChain to keep track of profitable meme coin traders and their investments.
When it comes to trading meme coins and making a profit, Deutscher writes that there are several steps to follow.
Treat the Meme Coin market like a casino: If you’re not comfortable betting a certain amount on a meme coin like you would at a casino, you probably shouldn’t, advised Deutscher.
Do not mix your meme coin capital with your investment capital: Any money spent on a meme coin should be kept separate from the funds you allocate to other assets, the analyst wrote. “This will definitely help you [separate] Your strategies and reduce [your] emotional toll,” he added.
Use technical analysis to enter: Use the dollar cost average or wait for big corrections before investing in the following high-period breakout, the analyst suggested.
Book profits strategically: Withdraw your initial investment after a 2x win and move up a predefined percentage with each subsequent win, Deutscher tweeted.
You should also look out for indicators such as: B. Trading volume exceeding market value, lower highs on high periods, a drop in holders or slowing growth, sales of giant whales, and a change in funding rates from negative to positive to determine when a peak occurs and risk decreased, the analyst wrote.
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