ICO Investing: Using Data Analytics for Successful ICO Investments

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A former analytics evangelist at IBM, Ian Balina is one of the most influential cryptocurrency investors and advisors in the world. He has appeared in publications such as Entrepreneur and Forbes for his work in analytics, cryptocurrencies, and entrepreneurship…

April 18, 2018 by
ICO Investing: Using Data Analytics for Successful ICO Investments

The Importance Of Using Data Analytics To Find The Best ICO To Invest In:

According to Coinschedule, over 3.8 billion dollars was raised in ICOs in 2017. That’s quite a lot of money. In fact, the chart showing the growth of ICO investing for the year looks like a rocket ship.

Why is that so? A lot of people who recently got on the ICO bandwagon are just going after the hype. It’s something I call FOMO, or “fear of missing out”.

A lot of people saw all the money that others were making from ICOs in 2017, and they wanted to be a part of it without having done any research or due diligence.

When I first got into ICO investing, I did the same thing. I was merely going after the hype. I went and invested in eight of the ten most popular ICOs at the time.

Whether they were actually a good investment or not, most of them ended up raising large amounts of money because of people like me who were afraid of missing out.

cryptocurrency

Cryptocurrency ICO Stats (2018)

Source: CoinSchedule, 2017

Guess what? Out of these eight ICOs that I invested in, only one of them was successful and made me money. The one interesting thing I learned from the experience, though, was that this particular ICO was the only one I used data analytics with.

So, I thought to myself: why don’t I start applying data analytics to find the best ICOs to invest in?

In today’s frenzied cryptocurrency investment environment, dozens of ICOs debut on any given day. As an investor, how do you go through all that? The market has become oversaturated.

How Moneyball can help you find the best ICO to invest in 2018

ico calendar

How To Invest In ICOs

Many people who want to invest in ICOs also have full-time jobs, families, and kids. We don’t all have the time to read and review piles of white papers every day. This is where data analytics comes in, to help you filter all through that noise quickly.

When I first started out with ICOs, about 20 or so of my investments were based on instinct. 62% of them were profitable and the ROI was 80%.

However, once I started using data analytics, my investments became 78% profitable and the ROI was 150%. The average ROI almost doubled because of data analytics.

The movie Moneyball was about a baseball team, the Oakland A’s. They were a small team with very little money to spend on players, which was a big problem because they had to compete against teams like the New York Yankees who had an almost unlimited budget.

So how were they able to go up against an organization with all the money in the world that could get some of the world’s top players on their team? They created Sabermetrics. They used data analytics to find and figure out how to get the best available players on a smaller budget.

This got me to thinking: why can’t we use the same analytics to invest in ICOs?

Using Token Metrics to spot ICO investing opportunities

Token Metrics is a similar method to Sabermetrics.

With Token Metrics, we take both quantitative and qualitative data points and plot them based on the top-performing ICOs. This grading system was created to determine which data points matter when making a return on your investment.

You can take this grading system and apply it to new and upcoming ICOs to evaluate them. Then you can adjust the grading system with new data points when they come out.

how to buy ico

ICO Investment

Quantitative data points that you need to include are token price, total tokens sold during the ICO, total token supply, the percentage of tokens being sold, the hard cap, total cryptocurrency market cap, and the size of the community measure engagement.

For the qualitative part: include the team, the advisors, the idea, the platform, and the prototype. When you have taken all these data points you create a host grade for an ICO. And then you can use that to grade new ICOs.

Although cryptocurrency is relatively new in the market, the data is still very valuable. Using data analytics, I was able to double my ROIs. One important point: 90% of the best ICOs have a prototype, an alpha, a beta.

Factors to consider when choosing an ICO

One way to filter through all the new ICOs that come out every single day is to ask yourself if they have any viable product. If they don’t, move on to the next. This will save you a great deal of time if you are employed, or even if you are investing full-time.

The next important factor is the team. You should ask yourself if they have any domain of expertise, or if they have worked for credible companies like Facebook, Google, or Amazon.

Finally, look at the hard cap. How much money are the ICOs trying to raise? When investing in ICOs, how much money they raise impacts the possible ROI. Today, based on the cryptocurrency market cap, I think anything under 40 million dollars is a good market cap, a hard cap.

Prior to using Token Metrics, 12 out of 19 of my ICOs, based on my instinct, were profitable. After using Token Metrics, 73% were profitable, and the ROI increased by a lot. Now every time I invest, I use Token Metrics.

Based on the last three months or so, the average investor has become more educated and that will make it harder to find profitable opportunities. That’s why you need to use data analytics if you want to find the best upcoming ICOs to invest in.

Want to learn more about how to find the best cryptocurrency investment opportunities? Check out the video of Ian Balina’s full presentation at HybridSummit 2017 here:

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