What is the top-down approach in crypto and how does it work?

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The digital currency market is full of different projects, each of which claims to offer new features. Undoubtedly, choosing the best project among the huge number of projects is a difficult task. There are different approaches to researching digital currency projects and selecting promising ones. One of these approaches The Top-to-Down Approach Is. But What is the top-down approach in crypto? And how is it different from the bottom-up approach? To get the answers to these questions, join the blockchain country.

What is the top-down approach in crypto?

What is a top-down approach?

At A top-down approach to crypto You take a step back and examine the bigger picture of the cryptocurrency industry. In this approach, questions such as where the digital currency industry is going, what are the biggest obstacles facing this industry, what problems have the most solutions and whether anyone has worked on the problem in question are raised.

This view can be called a macro view of the digital currency industry. Of course It should not be confused with the macro view in traditional economics. In fact, in a top-down approach you are trying to predict the future of the entire cryptocurrency industry in the coming months, years, or even decades, rather than the future of the market.

People often exaggerate their predictions about the next 2 years and don’t consider what might happen in the next 10 years.

In the top-down approach to researching digital currency projects, we first consider a large principle, then divide it into several smaller principles, and finally, select projects that are related to these principles for investment. Always remember that in this approach, these principles are important first and then the claims of the projects are raised. In fact, it is assumed that if a principle turns out to be true, the claims associated with it will also be true.

A top-down approach when researching cryptocurrency projects is much more difficult than a bottom-up approach and requires more effort. for better understanding Top-down approach to digital currency It is not bad to review the concept of bottom-up approach together.

What does bottom-up approach mean in crypto?

When researching for Choosing the best digital currency projectMost people, small investors or whales use a method called “The Down-to-Top Method”.

This approach includes checking various parameters such as total value locked (TVL) on the DeFillama website, whale wallet activity, Twitter posts, various projects on the Binance launchpad, smart contract trackers, Anchan analysis, etc. You use these parameters without realizing that you are using this approach.

Bottom up approach Although it may work well in certain situations, it is not very sustainable in the long run. In fact, this approach works like brute force attacks. Brute force attacks are a trial-and-error method for decoding data that does not use a specific intellectual strategy and blindly tries different combinations of characters to finally find the correct combination.

Simply put, the bottom-up approach does not work well and is just like finding a small amount of gold in a large amount of soil; Without any particular direction or framework. In fact, it can be said that luck is involved a lot in this approach.

The usual methods of researching cryptocurrency projects are somewhat superficial, and although they may pay off in the short term, they rarely last 6 months or more. Therefore, we need to change it a little. The bottom-up approach and examining the parameters we mentioned above, at best, provides average results to investors and is incomplete without its reverse study method, i.e. the top-down approach. But A bottom-up approach to the crypto market What are its components? How can we include this approach in our research?

Have high hopes for the future and success of the digital currency industry

The future of the crypto market

As we said, A top-down approach to crypto It is related to the long-term view and will not work at all in the short term. In fact, in this approach, everything depends on the passage of time.

Our main assumption is that the decentralized world will eventually dominate our current world and this technology will shape the structure of society in many ways. You have to have a lot of passion and hope to realize this future and you are not going to act like a temporary investor or someone who is looking for profit.

You must study a lot

A top-down approach is required to learn about the technologies that exist in the digital currency industry. In fact, in this approach, instead of just investing in an ERC20 token, you need to know what this standard is and how it works.

There is a lot of material on the basics of crypto and blockchain technology. For example, when you are looking to evaluate Ethereum second layer projects, you need to know how the Ethereum mainnet works and then compare it to other competitors. In this comparison, you must also check the distinctive approach of competitors.

Eventually, over time you will realize that the amount of time you spent researching is far less than the projects you chose to invest in. Based on my experience, The more you learn about cryptocurrencies, the fewer projects you choose to invest in. Remember, promising projects are rare, and the more you know about the field, the higher the standard you will be when investing.

Uninformed and amateur people invest in different projects, but those who have good knowledge of this industry, rarely choose different projects and while investing in a particular project, they assign a high figure to it.

I often say that working in the cryptocurrency market is a full-time job. In fact, many people underestimate the breadth of cryptographic technology, software development, and finance. Working in this market is like going back to university for information!

This approach requires basic technical understanding

I often think about how I would be in this market if I didn’t have experience in software development and graduated in computer science.

I already knew the basics but I still sometimes get overwhelmed by the ocean of information while studying this industry. In fact, the more you learn, the more you realize you know nothing about the industry.

Programming, mathematics, and cryptography are some of the basic requirements that you need to master to truly understand blockchain technology and cryptography. You may feel like these requirements are overwhelming, however, understanding these basics will make things much easier to understand going forward.


If you want to accelerate the process of understanding blockchain technology and the field of cryptocurrencies, it is better to participate in this space and directly interact with this industry. In the space of cryptocurrencies, there are many parameters that you need to consider.

Allow the market to surprise you

Humans have limited imagination. Even if you think you have considered all the possibilities with all the available information, there are still some things you may not have considered.

Let the market movements surprise you and let go of the events that are not under your control. Sometimes, the things that happen, especially in the short term, have no particular reason and you don’t need to know the ins and outs of it. We may need some time to realize the real principles.

Also, avoid mediocrity. Additional information may make you unable to analyze and make decisions. In fact, there is a clear line between a person interested in digital currency technology and an investor. Try to have a balance in this field. Also, don’t dismiss different ideas just because they don’t make sense.

Remember that investing is more of an art than an exact science!

Use the knowledge of others

Digital Currencies Youtube Ethereum Crypto Price Analysis

Maybe not everyone has the opportunity to spend time every day learning about the cryptocurrency industry. In addition, it may be a bit discouraging for newbies to get detailed information about this field. If you don’t know much about digital currency, don’t despair. Remember, you can always read other people’s findings and research and get your own result by weighing them down.


Whether you invest your money in the market or keep it in the bank, you are facing risk. What is important is which approach you choose to face this risk. When most people want to invest in the digital currency market, they look at whale charts and the mouths of influencers, and unfortunately, they do not understand the difference between signals and strategies. For this reason, they often fail in the crypto market and condemn it. The reality is that you need a new mental model to enter and survive in crypto. A mental model based on a top-down view. When you take a few steps back and patiently examine the bigger picture of the market, you have adopted a top-down approach.

Your opinion about A top-down approach to crypto What is? Which approach do you usually choose?


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