Analysis of the crypto market
Cryptocurrencies have been around for a while and there are various documents and articles on the basics of cryptocurrencies. Cryptocurrencies have not only flourished, but have opened up as a new and reliable opportunity for investors. The crypto market is still young but mature enough to pour in the right amount of data for analysis and predicting trends. Although it is considered the most volatile market and a great gamble as an investment, it has now become predictable to some degree and Bitcoin futures are proof of that. Many stock market concepts have now been applied to the crypto market with a few tweaks and changes. This gives us another proof that many people are embracing the Cryptocurrency market every day, and there are currently more than 500 million investors present in it. Although the total crypto market capitalization is $286.14 billion, which is about 1/65 of the stock market at the time of writing, the market potential is very high considering the success despite its age. and the presence of already established financial markets. The reason behind this is nothing more than the fact that people have started to believe in the technology and products that support a crypto. This also means that crypto technology has proven its worth and so much so that companies have agreed to put their assets in the form of crypto currencies or tokens. The Cryptocurrency concept caught on with the success of Bitcoin. Bitcoin, which used to be the only cryptocurrency, now contributes only 37.6% of the total cryptocurrency market. The reason is the appearance of new cryptocurrencies and the success of the projects that support them. This does not indicate that Bitcoin failed, in fact Bitcoin’s market capitalization has risen, rather it indicates that the crypto market as a whole has expanded.
These facts are enough to prove the success of Cryptocurrencies and its market. And actually, investing in the cryptocurrency market is considered safe now, to the extent that some invest in their retirement plan. Therefore, what we need next are the tools for crypto market analysis. There are many such tools that allow you to analyze this market in a similar way to the stock market that provides similar metrics. Including coin market cap, coin stalker, cryptoz and investment. Although these metrics are simple, they provide crucial information about the crypto in question. For example, high market cap indicates a strong project, high 24-hour volume indicates high demand, and circulating supply indicates the total number of coins of that cryptocurrency in circulation. Another important metric is the volatility of a crypto. Volatility is how much the price of a crypto fluctuates. The crypto market is considered highly volatile, cashing out at one point can either lead to a lot of profit or make you pull your hair out. Therefore, what we are looking for is a crypto that is stable enough to give us time to make a calculated decision. Coins like Bitcoin, Ethereum, and Ethereum-classic (not specifically) are considered stable. Being stable, they must be strong enough that they do not become invalid or simply cease to exist on the market. These characteristics make a crypto trustworthy, and the most trustworthy Cryptocurrencies are used as a form of liquidity.
As far as the crypto market is concerned, volatility comes hand in hand, but so does its most important property, i.e. decentralization. The cryptocurrency market is decentralized, which means that a fall in the price of one cryptocurrency does not necessarily mean a downward trend in any other cryptocurrency. Thus giving us an opportunity in the form of what is called mutual funds. It is a Concept of managing a portfolio of the cryptocurrencies in which you invest. The idea is to spread your investments across multiple cryptocurrencies to reduce the risk involved if any crypto starts out in a downtrend.
Similar to this concept is the concept of indices in the crypto market. The indices provide a standard benchmark for the market as a whole. The idea is to choose the main currencies in the market and distribute the investment among them. These chosen cryptocurrencies change if the index is dynamic in nature and only considers the major currencies. For example, if a coin ‘X’ falls to position 11 in the crypto market, the index that considers the top 10 coins will now not consider the coin ‘X’, but will start considering the coin ‘Y’ which has taken its place. place. Some providers like cc30 and crypto20 have tokenized these Crypto indices. While this may seem like a good idea to some, others oppose it due to the fact that there are some prerequisites for investing in these tokens, such as a minimum investment amount is needed. While others, like cryptoz, provide the methodology and value of the index, along with the currency components, so an investor is free to invest the amount they want and choose not to invest in an otherwise included cryptocurrency. in an index. Therefore, indices give you the option to further smooth out volatility and reduce the risk involved.
Conclusion
The cryptocurrency market may seem risky at first glance and many may still be skeptical of its authenticity, but the maturity this market has reached in the short period of its existence is astonishing and proof enough of its authenticity. The biggest concern investors have is volatility, for which there was a solution in the form of indices.