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The Crypto market has become a trillion-dollar industry. The total market capitalization of all cryptocurrencies reached over $2.4 trillion in May 2021 where Bitcoin set a new record of $62 K, Ethereum surpassed $3500, and so on.
The total market value of cryptocurrencies highlights a keen interest of crypto enthusiasts who are crazy to invest in digital assets. The promising feature of cryptocurrency is giving astronautic returns on investment. Contrary to this inspiring aspect, crypto investment is highly susceptible to volatility leading to the loss of an invested amount.
In this article, we’ll give you a useful piece of advice that will change your life & you will act as a crypto expert while buying altcoins.
The most important factors cryptocurrency investors should consider for all crypto traders or investors (Novice or expert) before they buy or invest money into any virtual asset are listed below.
CoinMarketCap is a premier source of cryptocurrency data right now. It gives insight into cryptocurrency prices, ranks, market capitalization, trading volumes, crypto trading pairs, and exchanges where it trades, tracking the history of digital assets and current market position.
Investors need to review the cryptocurrency market data. This is helpful in determining the past & future performance of the virtual currencies.
CoinMarketCap is the most visited website in the crypto space. It aggregates data from exchanges & crypto networks and brings more transparency and data accountability to the cryptocurrency market. It provides accurate information to all crypto geeks and explores the investment risks by depicting the price movement of cryptocurrencies.
There are almost 10,413 cryptocurrencies that have been trading in crypto markets indicating their market capitalization. In essence, the daily trading volume of coins/tokens in 312 exchanges determines the ranking of coins.
For instance, Ethereum price hovering around $2, 495.70 & has secured the second position with a market capitalization above $290 as of June 14, 2021. Then Tether, Binance Coin, Cardano, etc list in order with their ranking position.
Altcoins that perform well & fall in the top 10 for a longer duration are always considered more reliable, tested coins, and a sign of profitability.
The cryptocurrency with the largest market capitalization is less vulnerable to volatility as compared to the coin with a small market cap, which often witnessed high fluctuation in price swings.
A careful selection of coins is imperative to make a profit in the cryptocurrency market. Investors need to choose Altcoins with considerable market capitalization.
The Marketcap of each currency can be determined by multiplying the circulating supply of coins by its price.
Cryptocurrency charts are helpful indicators to quickly review the market cap, price and trading volume, as well as the overall performance of the coin from its inception to date. The graphic movement of the digital currency reflects the usual trend of price fluctuation of the specified currency.
Charts represent the recent and previous currency bullish as well as bearish market trends.
Trading volume is another yardstick to select the coin/token. It shows to what extent the particular coin is being traded out of available circulating crypto assets.
A coin with high trading volume has attributes of high liquidity and indicates the mark of most accepting coins for trading, buying, and selling in various exchanges. Most of the cryptocurrency exchanges have delisted the coins with low trading volume.
Historical data on the website of Coinmarketcap give insight about price trend analysis of coins on a weekly, monthly, quarterly, and yearly basis. The investor can track the record of the price movement of the coin and can guess how well it would perform in the future.
For daily traders, it provides day opening and day ending price shifts with high and low-price variations between them. This data helps investors to have a plan for daily trading for a specific coin.
CoinMarketCap website shows a list of specific cryptocurrency pairs with crypto assets and fiat currency available in various decentralized exchanges. A coin with more trading pairs on more exchanges should have more liquidity and are high in demand.
Crypto enthusiasts must have a basic understanding of technology i.e., hot wallets which are online wallets & are usually offered by most of the crypto exchanges. Alternatively, cold wallets are offline wallets.
It is recommended to use the hot wallet to store coins having a small value in amount so the investors can take the immediate step to lock the trading opportunity by making instant transactions through the hot wallet.
However, a hot wallet is preferable to store a sufficient number of cryptocurrencies having more value. It offers an extra security layer & is highly recommended to investors who are interested in long-term investment.
Eagle-eyed investors should not pour all their investments into a single cryptocurrency. There is a significant risk of loss of funds revolves around digital currencies due to some identified reasons such as price swings, fear of missing out (FOMO), and the entrance of Whales, etc.
It is recommended to invest between 5 to 10% of their total income in a diverse crypto portfolio. Similarly, crypto geeks need to cap the stop-loss order for any cryptocurrency at 2 to 4% below its purchasing price.