How to judge an altcoin before you look at its chart

A chart is a record of decisions other people have already made. It is genuinely useful information, and there is a case for reading it — we have written about how to do that without fooling yourself. But it cannot tell you what you would actually be buying, and if you look at it first it will colour everything that follows. Momentum is persuasive in a way that fundamentals are not.

So here is the order we would use instead. None of it requires a subscription, and none of it is a valuation model — there is no reliable one for this asset class. It is a list of ways to find the thing that would embarrass you later.

1. Supply, before you look at the price at all

The single most common error in crypto is treating a low unit price as cheap. It is not a fact about value; it is a fact about how many units exist. What matters is market capitalisation — price multiplied by circulating supply.

Number to find	What it tells you
Circulating supply	Units actually in the market now
Total supply	Units that exist, including locked ones
Maximum supply	Whether issuance ever stops
Circulating as % of maximum	How much future dilution is already scheduled

That last row is the one people skip. If a fifth of the eventual supply is circulating, then four times the current float is arriving at some point, and every existing holder is diluted by it. The market may have priced this in. It may not have. But you cannot form a view without the number, and it takes about a minute to find. Our coin comparison tool puts these side by side, and each asset’s own page carries the full set.

2. The unlock schedule, which is when dilution actually lands

Knowing that supply will grow is not enough; the timing is what moves markets. Most projects publish a vesting schedule covering team, investor and treasury allocations. Read it and note the dates where a large tranche becomes transferable.

Two questions matter more than the total. First, are early investors sitting on a very large paper gain? A holder up several multiples behaves differently from one at cost. Second, is the tranche large relative to daily traded volume, not relative to market capitalisation? A release worth a few percent of market cap can be many days of volume, and that is what determines whether it can be absorbed.

If there is no published schedule, treat that as a finding rather than an absence of one.

3. Concentration: who actually holds this

Public blockchains let you inspect holdings, and a block explorer will show you the largest addresses for most assets. You are not looking for a specific threshold. You are looking for whether a handful of addresses could exit through the available liquidity without destroying the price.

Read the result carefully — this is where naive on-chain analysis goes wrong. A very large address is often an exchange holding customer assets in aggregate, which is not concentration in any meaningful sense. Conversely, one entity can hold many addresses and look like many holders. On-chain data has real limits here, which we cover in what on-chain data cannot tell you.

4. Usage that is distinguishable from incentives

This is the hardest check and the most valuable. Plenty of networks show impressive activity that consists almost entirely of people farming a reward. That is not demand for the product; it is demand for the subsidy, and it stops the day the subsidy does.

Useful questions: is there activity from addresses that receive no rewards? Does usage survive a reduction in emissions? Is there revenue paid by users who want the service, as opposed to paid to users to attract them? Does the fee the network earns come from anywhere other than the token it issues?

You will often not be able to answer these definitively. Getting a clear negative — usage collapses without incentives — is still an excellent outcome for twenty minutes of work.

5. Liquidity and where it lives

Liquidity is your ability to exit at a price near the one you see quoted, and it is not implied by market capitalisation. An asset can carry a large valuation while its order book is thin enough that a modest sale moves it several percent.

Check how many venues list it, how concentrated volume is on the largest one, and how much of the “volume” is on a single venue with unverifiable reporting. Then look at the depth near the current price, not the headline 24-hour figure. If most trading happens on one venue, your exit risk includes that venue’s operational risk, whatever you think of the asset.

6. Who can change the rules

Ask what can be altered, by whom, and how fast. Can an upgrade change the token’s behaviour without holder approval? Is there an address that can pause transfers, mint new units, or freeze balances? Is the code deployed the code that was audited? A privileged key is not automatically damning — many legitimate projects retain one to fix bugs — but it is a risk you should be holding knowingly rather than discovering later.

7. Whether the claims are specific

Read whatever the project says about itself and sort each claim into “checkable” or “not”. “Partnered with a major bank” is unfalsifiable as written. “Processes settlement for this named counterparty, live since this date” is checkable. Vagueness that persists across a whole document is a pattern, and the pattern is the information.

Then, and only then, look at the chart

Having done this, the chart becomes useful rather than persuasive. You know what the supply overhang is, so you can see whether a decline coincided with an unlock. You know where liquidity is, so you can tell a real move from a thin one. You have your own view, and the chart is now evidence to test it against rather than the thing forming it.

Two honest caveats. This process is designed to help you avoid obvious traps, not to identify winners — the checks are much better at producing a confident “no” than a confident “yes”. And nothing here is a recommendation to buy anything. We do not make those. Read our disclaimer for the full position.