Reinventing Research in the Cryptomania Era

Investors in the capital markets have a broad range of information sources to research; quarterly reports, earnings calls, financial statements, analyst reports, and a long history of price charts for analysis.

However, with the explosive rise of Cryptocurrency popularity in 2017, investors now face an unprecedented challenge. The majority of traditional research methods are obsolete when dealing with crypto and clearly the very nature of Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term means fundamental analysis is impossible.

Instead, there is a constant flow of information and news that needs to be monitored incredibly closely. This gives investors a new task: to find reliable information and solid research methods that will enable them to get to grips with the wild and often unexpected crypto market.

Cryptocurrency research tools

So what available resources are there for individual investors looking to get an edge in a new stormy market? Alternative datasets and research tools allow investors to react to price-changing crypto events almost instantaneously. Three key examples of these alternative datasets are:

News sentiment and insights

Since there are no measurable fundamentals, the main factor driving prices of cryptocurrencies is the media. Massive amounts of cryptocurrencies articles on leading publishers every day is what made this market mainstream - and the altering sentiment of the news is what determined the prices.

Example – news sentiment of Ethereum

Knowing the news “summary” saves investors the need to read everything published and get the bottom line and not surprisingly the amount of news and the sentiment has a direct correlation on prices, as in the example of the Ripple coin below:

Search trends

Data visualization of internet trends provides valuable insights that can be capitalized on and recognizing these trends early on is valuable for investors. The most searched keyword on Investopedia was Bitcoin in 2017 and that was obviously a strong signal.

Google trends provide an interesting and sticky experience when looking for trends and while Google is irreplaceable when it comes to searches, there are many resources for getting search trends that, like Google, do not show the exact number of searches.

Crowd wisdom

Harnessing the wisdom of the crowd was always a great way to create benchmarks and get immediate insights for different areas in life. But when it comes to investing in crypto it is even more powerful, as investors can not only see what other investors are buying or selling they can also learn how to diversify a portfolio which in the capital markets is a basic service provided by any investment advisor.

Pictured above: CFDS - Retention and Deposits Workshop, 2017 FM London Summit

By utilizing a community of crypto investors you can optimize portfolios through better diversification based on crowd wisdom and you can generate ideas based on what the best performing crypto-investors are trading.

Other than the tools above, crypto brokers or research platforms can always offer investors the obvious technical analysis, screeners and heat maps, though experience from the capital markets show the value users get is limited.

Uri Gruebaum is the co-Founder and CEO of Tipranks, provider of actionable research tools offered by over 100 banks, investment houses and retail brokers. If you’re interested to learn more about tools that cryptocurrency traders engage with or where the industry is going, feel free to contact us on bizdev@tipranks.com