How to Find Cryptos Before They Pump (2024)

#2: Identify upcoming updates that could launch them to the moon

Don’t chase it, let it come to you.

This might apply to both romantic partners and cryptos and when they come you feel like heaven on Earth.

By fairly assessing lower market cap coins, you’ll be able to look at the pumps from a comfortable position and be on top of the wave when it starts.

So let’s start digging into the lower levels of the CoinMarketCap dashboard and find ourselves among some crazy price action. These mind-blowing gains might be difficult to find at this stage of the market, but double-digit pumps are not uncommon.

Here’re 5 tips to help you discover these hidden gems.

Ideally those you haven’t heard of or looked into before.

Not knowing about them will keep you objective when assessing how much potential they have.

And it’s better if these coins haven’t been extensively covered by influencers. Fewer eyes have looked into the coin’s potential.

Start by going to CoinMarketCap and look for coins from the second or third page onwards.

Note: the farther you go, the more risk you take.

Check each coin out, one by one, and look for the following things:

• Price history: the coin should be trending up in time without any strange peaks or questionable trading volume throughout its history. By placing your cursor on the chart you’ll be able to see these changes. Now if these coins are newer (after the last bull market in 2017), the better. These coins will not have a clear price resistance which gives free rains for them to keep rallying.
• Discern between coins and tokens: is it a cryptocurrency that has its own blockchain (coin) or is it part of another one (token)? Ideally, it should have its own blockchain or it should be on one of the major blockchains (e.g. Ethereum, Cardano, Solana).
  Note: avoid tokens on the Binance Smart Chain or Tron.
• Exchange support: you should look for its trading volume on both centralized and decentralized exchanges. Check this info on the market tab at CoinMarketCap for the coin you’re looking at. Look for exchanges where it’s listed (e.g. Kraken, Coinbase, Kucoin, etc.) and how it's being traded.
• Community Strength: check the crypto’s social media (e.g. Twitter, Instagram, etc.) and see the number of followers and its community engagement level (e.g. comments, number of posts, etc.). Compare it to other cryptos with a similar market cap and see where it stands.
• Tokenomics: look for the coin’s circulating supply (e.g. is it fixed? If not, what’s the inflation rate?), allocation/distribution (e.g. how is it distributed among the founders, team, and other shareholders?), staking (e.g. if it’s locked, when can you take out your crypto?), utility (e.g. store of value, gas fees to move tokens around, etc.), among other characteristics.

These indicators will give you a better understanding of the potential of your coin and clear any doubts about it fading away quickly.

The events and announcements on a certain cryptocurrency will be vital for its development and potential pump.

However, you should separate them into three categories to be more aware of how the project is evolving:

• Predictable updates: check out the CoinMarketCap events section and CoinMarketCal website to be aware of what’s happening with your coin candidates. You’ll find a calendar that’ll give you a better overview and help you plan your strategy for each cryptocurrency.
  Example: Cardano’s Alonzo update was announced in August of 2021 which gave people time to prepare for the increase in price until September the 1st.
• Unpredictable updates: this news isn’t published ahead of time but to be somewhat prepared, regularly check your crypto’s blog and turn on the notification bell for their Twitter account (or the social media they’re more likely to post on).
  Example: Avalanche pumped after a venture capital firm announced a $230 million investment in its ecosystem.
• Setbacks or delayed updates: the news that something is taking more time than expected is not new in the crypto space. Any delay can have a significant impact on the coin’s price, but many times patience can bring its rewards.
  Example: Although Shiba Inu’s Coinbase listing was delayed for a couple of months, crypto holders that waited saw a 50% pump as a result.

Start by managing these different timetables and you’ll not be caught off guard.

The most widely used strategy is to buy the rumor and sell the news.

However, you have to take into consideration the coin’s market cap since it tends to behave differently if it’s a large, medium, or small market cap coin:

• High market cap coins are usually backed by big investors (institutions or individuals). This smart money tends to make thoughtful and calculated investment decisions. You’ll see that the pumps stretch in time for days or even weeks.
• In comparison, medium and small-cap coins are usually backed by retail investors whose decisions tend to be driven by emotions. The pumps will frequently be more short-driven (1–2 days) and intense after the bullish news comes out.
  People might FOMO (fear of missing out) into coins with a low dollar value disregarding their market cap, which is ultimately the indicator to look for regarding how high can the price go. They’ll think that low dollar value coin will be an easy way to get rich and so they’ll go all in without much thought. And as fast as they run into it, the fast they’ll run to get out of it as well. Thus, you’ll see an intense short-lived pump.

And this brings us to the next tip.

You’ll hear it over and over again but it’s the first thing you should always do: check the coin’s market cap.

The lower the market cap the more room for that coin to grow.

Don’t focus on the dollar value of the coin, it will only paint a very inaccurate picture. Stick on what’s really important.

A coin’s low market cap indicates that it takes less money to push its price higher.

Let’s look at two indicators of a coin’s price growth potential:

• Psychological price barriers: people have certain goals in mind that are more easily visualized with well-defined numbers. They will look for a coin’s price to reach a certain value like 50 cents, 1 dollar, 10 dollars, 50 dollars, and so on, to make a move. We like to place levels or stages along a path so we can better understand what’s going on and what to do.
  One of these strategies is profit-taking during the coin’s price evolution. These subjective levels will trigger selling orders which will create resistance in the coin’s upward trend.
• Technical analysis: check for previous zones of support and resistance for that coin, the moving average, and other indicators (e.g. Bollinger bands, Relative Strenght Index, etc.) that will give you a better overview of where the price is heading.

Once you’ve assessed how long and how high your crypto could pump given the updates on that project, you should plan how much money to invest and when to take profits.

Even if you have an idea of how the pump will go, it will never play out exactly as you predicted.

Never go all-in into a crypto project! Especially if it’s one big investment move you’re planning to take.

Many of the altcoins you’re checking out won’t last long so be willing to risk only what you can afford to lose. You’ll minimize your losses and what’s more important, you’ll sleep better.

So how to take profits?

One strategy is to sell according to percentage gains instead of any price level that’s comfortable for your psyche. Others will rely on these psychological barriers so you won’t even get a chance to sell at those levels.

For instance, you could cash out some of your cryptos after you’ve gained 25% on your initial investment, and then sell another part when you reached a 50% gain.

This way, you’re still in the game if an even greater pump comes your way.

Once you know how much you’re putting into your next gem and have planned how you’ll be taking profits, consider your coin’s long-term potential.

You’ll know you’ve found a valuable coin when you see the following features:

• Utility: the coin has a use case that maintains a constant demand for it. It will bring buying pressure onto the market that will keep the coin’s price in an upward trend.
• Listed on exchanges: the coin is listed on a reputable exchange like Binance but has not yet been listed on a U.S. exchange like Kraken or Gemini. Once it lists on a U.S. exchange, expect more money inflow.
  Most of the money coming into the space is from the U.S. and if regulation tightens, investors will prefer local exchanges over offshore ones for security (and legal) reasons.
• Partnerships: if the crypto project is partnering with other popular projects and protocols, it’s more likely that it will stand the test of time. The future of the space is interoperability and no coin will be able to operate on its own. If the crypto in mind doesn’t cooperate and integrate with other projects and protocols, it will easily become obsolete.
• Smart money funding: venture capital that backs up a crypto project is a strong indicator of a bright future. These firms take a lot of time analyzing these projects so once they give their support, it sends a strong signal that the project is legit and has a lot of growth potential. This will in turn persuade others to invest in the project, making it more robust over time.
• Innovation: the crypto project should always be innovating and developing its ecosystem. You might have noticed that the space is highly competitive and a project can easily be left behind if it doesn’t keep a strong evolutionary pace.

The crypto project might check most or all of the above features. See where it stands out and where is room for development and you’ll get a more objective picture of your coin.

The saying goes that if you’re chasing a pump, you’re already late to the game.

In these situations, emotions will drive your investment and that will most certainly end up in a catastrophe.

That’s why these 5 tips will help you plan ahead and get you involved in the crypto project early on before the main hype takes it to the moon.

Take this research process seriously and when the time comes, the price will chase you, and not the other way around.

Note: nothing here should be considered as financial advice. Always do your own research before making any investments and invest only what you can afford to lose.

If you enjoy reading stories like these and would like to support writers on Medium, consider signing up to become a Medium member. It’s just $5 a month and you’ll have unlimited access to articles from amazing writers all over the world.

Schedule a DDIChat Session in Blockchain and Cryptocurrency:

Apply to be a DDIChat Expert here.
Work with DDI: https://datadriveninvestor.com/collaborate
Subscribe to DDIntel here.