More Than Finances rates crypto coins using four metrics.

1) Market Adoption/Social Media: We approximate market adoption by examining the number of followers of the coin’s official social media accounts. Commonsense dictates that for a crypto coin to survive, it needs at least 1,000 active users. We, therefore, summate the total followers across all accounts and divide by 100. A follower count of 1,000 gets a value of 1 to this metric. Otherwise, we assign a value of 0.

2) Daily Market Trading Volume: In order for a coin to be a suitable investment, it must have sufficient liquidity. In other words, there must be enough buyers and sellers for owners to be able to transact their coins if they want to buy or sell them. We set sufficient liquidity at an average trading volume of $400,000 per day. If the coin averages $400,000 or more dollars worth of trading volume per day, this metric gets a value of 1. Otherwise, we assign a value of zero.

3) Momentum: A key idea in owning crypto or other securities is momentum. This refers to sustained investor sentiment, either positive or negative. Often, investor sentiment can impact the performance of investment regardless of the underlying market adoption or inherent profitability of the coin. We operationalize this metric in the following manner. If the coin has a more than 20 percent price increase in the past 12 months, then we code momentum as 1 — indicating favorable momentum. Otherwise, we assign this a value of zero.

4) Solves A Significant Market Problem: A crypto coin must have compelling value or business proposition. In other words, it must solve a significant market problem, have a competitive advantage or hold a leading market position. For each coin, we review the use case, white paper, and media reports. We then communicate with subject matter experts to make a subjective assessment and determine whether the coin solves a significant market problem. If the coin does solve a market problem, we assign this metric a value of 1. Otherwise, we assign it a value of 0.

Once all four metrics are defined, we add them up and assign a “thumbs up” or “thumbs down” rating.

Ratings are assigned in the following way.

4/4 = Thumbs Up
3/4 = Thumps up/Down
2/4 = Thumps up/Down
1/4 = Thumbs Down
0/4 = Thumbs Down

A “thumbs up” or “thumbs down” rating is not a recommendation to buy or sell a particular coin. It also does not take into account your specific risk tolerance, financial health, or investing goals. It is, however, a semi-objective rating regarding the suitability of the coin for investors and should be considered pieces of information when making an investment decision.

Author

  • James Hendrickson

    James Hendrickson is an internet entrepreneur, blogging junky, hunter and personal finance geek.  When he’s not lurking in coffee shops in Portland, Oregon, you’ll find him in the Pacific Northwest’s great outdoors.   James has a masters degree in Sociology from the University of Maryland at College Park and a Bachelors degree on Sociology from Earlham College.  He loves individual stocks, crypto investing, bonds and precious metals.

(Visited 18 times, 1 visits today)