Ben Simpson (YouTube) outlines three warning signs investors should avoid when evaluating crypto projects: (1) no real-world use case or utility, (2) poor tokenomics such as inflationary supply dynamics, and (3) weak community or development activity. He contrasts these with Bitcoin’s capped supply as an example of sound tokenomics and explains that projects lacking these features tend to crash heavily in bear markets.
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If a project shows any of these three signs, I would not touch it no matter how hot it is. Number one is no real world use case or ability to actually help the world. So much of crypto is absolute rubbish because it's all speculative value. And when the market goes down in the bear market, these are the coins that go down 90%. That's why I don't touch a lot of the meme coins, because a lot of them have no real world utility. Number two is if it has awful tokenomics. So many people don't understand token economics. These are how the supply and demand works of the token, how it generates revenue. And so many altcoins generate new tokens into the supply which creates inflation. This is the reason why bitcoin wins is because it has no inflation, it's deflationary, it has a cap supply. So many altcoins print new tokens into its ecosystem and that's why the price goes down, because it needs so much more demand. All right, so tokenomics number two and the third is the community. If it doesn't have a strong community, if it doesn't have a lot of development activity, socials are down and poor marketing, unfortunately I will not touch that project unless it's got absolutely crazy good fundamentals that overweight. But those are the three things I look at.
