REVIEW & RATING METHODOLOGY
There are numerous parameters linked to a particular crypto project's gradual growth, drive, and sustainability. At Blocknomy, the most indicative parameters are chosen to rate and review crypto assets to give a clear, unbiased & impartial overall score. These parameters are defined as follows:
• Product Progress:
The score depends on the current state of the product i.e. if it's in ideation phase or beta mode or has been fully deployed. Blocknomy also takes into consideration the growth of users if the product is launched on the mainnet. A higher score is given when the product is deployed for public/enterprise use.
The team score depends on the size of the employees & members working on the project/company. Plus, it also determines the past accomplishments of the top executives (CEO, CTO, COO) & the years of experience they have in their respective fields. Advisory board members (if any) are also evaluated & added to the total team score.
• Token Fundamentals:
Token fundamentals are dependent on the different token metrics of the project viz. the total supply of the token, circulating supply, tokens sold during public sale, token held/locked by the team, token standard (ERC20 or others) & token algorithm (POS or POF). Projects with a deflationary token burn mechanism are given a higher score.
• Github Activity:
Github activity determines the development activity of the project. Github is an online platform that simplifies the process of working with other people and makes it easy to collaborate on projects. This technical engagement is termed as "events" which include code lines, pull requests, issues generated, views, stars & the number of commits made. Therefore, the higher the engagement/events, the higher the score will be.
• Marketing & PR:
One of the crucial aspects of widespread adoption of a product or project lies in its marketing & promotion. Therefore, Blocknomy evaluates all online or offline advertisements run by the project, such as digital ads (Facebook, Google, etc.), billboard ads, influencer campaigns, referral campaigns, affiliate campaigns & their social media outreach.
Genuine partnerships validate crypto projects & increase their trust-factor. The score depends on the number of current partners onboard and their type of association. Noteworthy or any bluechip partnerships are given a higher score.
More often than ever, crypto projects lose out due to not finding the right market-fit or facing high competition from existing players. The uniqueness score reflects the degree of competition faced by the project with respect to its domain, vision, market sector & overall attributes. A project with less competition is more unique and vice versa.
After calculating the above-mentioned parameters, the Blocknomy Score is generated which is the final score of the particular project. It is to be noted that, the scores are not constant & automatically update with respect to the project's growth.
BUY SIGNAL METHODOLOGY
The buy signal section of the website merely suggests the current mood of active investors/traders & does not provide direct guidelines of any action, advice, or suggestion.
This signal is based on two parameters & those are as follows:
(i) Overall Crypto Market Sentiment
(ii) A Project's Average Social Sentiment
The overall crypto market sentiment is fetched from the Fear & Greed Index (https://alternative.me/crypto/fear-and-greed-index/) which tries to provide a mathematical approach to understand the market sentiment by keeping aside any human emotions. There are two simple assumptions of the Fear & Greed Index:
• Extreme Fear can be a sign that investors are too worried. That could be a buying opportunity.
• When Investors are getting too greedy, that means the market is due for a correction.
Therefore, the index analyzes the current sentiment of the Bitcoin market and crunch the numbers into a simple meter from 0 to 100. Zero means "Extreme Fear", while 100 means "Extreme Greed". These values are deduced from different data sources which are listed below:
(i) Volatility (25%):
It is measuring the current volatility and max. drawdowns of bitcoin and compare it with the corresponding average values of the last 30 days and 90 days. We argue that an unusual rise in volatility is a sign of a fearful market.
(ii) Market Momentum/Volume (25%):
Also, it is measuring the current volume and market momentum (again in comparison with the last 30/90 day average values) and put those two values together. Generally, when we see high buying volumes in a positive market on a daily basis, we conclude that the market acts overly greedy / too bullish.
(iii) Social Media (15%):
While our Reddit sentiment analysis is still not in the live index (we’re still experimenting with some market-related keywords in the text processing algorithm), our twitter analysis is running. There, we gather and count posts on various hashtags for each coin (publicly, we show only those for Bitcoin) and check how fast and how many interactions they receive in certain time frames). An unusual high interaction rate results in a grown public interest in the coin and in our eyes corresponds to greedy market behavior.
(iv) Surveys (15%):
Together with strawpoll.com (disclaimer: we own this site, too), quite a large public polling platform, we’re conducting weekly crypto polls and ask people how they see the market. Usually, we’re seeing 2,000 - 3,000 votes on each poll, so we do get a picture of the sentiment of a group of crypto investors. We don’t give those results too much attention, but it was quite useful at the beginning of our studies. You can see some recent results here.
(v) Dominance (10%):
The dominance of a coin resembles the market cap share of the whole crypto market. Especially for Bitcoin, we think that a rise in Bitcoin dominance is caused by a fear of (and thus a reduction of) too speculative alt-coin investments since Bitcoin is becoming more and more the safe haven of crypto. On the other side, when Bitcoin dominance shrinks, people are getting more greedy by investing in more risky alt-coins, dreaming of their chance in the next big bull run. Anyhow, analyzing the dominance for a coin other than Bitcoin, you could argue the other way round, since more interest in an alt-coin may conclude a bullish/greedy behavior for that specific coin.
It also pulls the Google Trends data for various Bitcoin-related search queries and crunch those numbers, especially the change of search volumes as well as recommended other currently popular searches. For example, if you check Google Trends for "Bitcoin", you can’t get much information from the search volume. But currently, you can see that there is currently a +1,550% rise of the query „bitcoin price manipulation“ in the box of related search queries (as of 05/29/2018). This is clearly a sign of fear in the market, and we use that for our index.
The project's Social Sentiment
is an interesting concept where Blocknomy uses its AI algorithm to determine the overall bullishness or bearishness sentiment by understanding what people are saying online about that particular asset/project. It considers a set of crypto-related discussions from the internet which is collected and stored in the form of text documents. It includes chat conversations, forum posts, Reddit posts, comments/replies, Tweets, and also news articles. Through rigorous machine learning, the AI is then able to provide two outputs viz. Type & Polarity. The Type determines the bullishness or bearishness of the overall posts & Polarity gives a numerical value which ranges from -1 to +1 where -1 is bearish & +1 is bullish.
Once the values of overall market sentiment & project social sentiment are ascertained, they are then matched together to bring out 4 unique cases that finally undermine the project's buy signal. They are as follows:
(i) Excellent time to buy:
The best time to make an entry as the overall market is in panic or fear with less hype, thus opening up your opportunity to buy at lower price levels. It's represented with a violet flame.
(ii) Good time to buy:
A good time to make an entry when the market sentiment is neutral. It's depicted with a blue flame.
(iii) Risky time to buy:
It can be a good time for entry but price may fall in the short term. It's depicted with a red-orange flame.
(iv) Bad time to buy:
Not the right time to enter as prices are above the optimal level & due for a correction. It's depicted with a red-orange flame.
Flame animation by Satrio Yamanda (https://codepen.io/yamanda)
Moreover, our model follows & relies on that one golden rule of investment i.e.
"Buy when there's fear in the market and not when there's greed."
This is our core ethos when providing any kind of buy signal for a project. These signals are deduced from fundamental analysis and not technical analysis or charting as it's historically proven, crypto defies technical chart flow. Blocknomy also doesn't provide sell signals as it cannot ascertain an individual's investment strategy. However, it's to be noted that our model is built to be solid & robust but cannot always guarantee a 100% correct verdict. It should be taken as a tool to theoretically approach your investment decisions. Currently, the Buy Signal supports a multitude of projects and new ones are being added gradually.