Crypto market analysis
Cryptocurrencies have been around for a while and there are several documents and articles on the basics of cryptocurrencies. Not only has cryptocurrency flourished, it has opened up as a new and trusted opportunity for investors. The cryptocurrency market is still young, but mature enough to provide the right amount of data for analysis and forecasting trends. Although it is considered the most volatile market and a great bet as an investment, it has now become predictable to some extent 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 further 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 market capitalization of the cryptocurrency market is $ 286.14 billion, which is roughly 1/65 of the stock market at the time of writing this article, 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 other 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 succeeded 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 emergence of new cryptocurrencies and the success of the projects that support them. This does not indicate that Bitcoin has failed, in fact, the market capitalization of Bitcoin has increased, rather what this indicates is that the crypto market has expanded as a whole.
These facts are enough to demonstrate the success of cryptocurrencies and its market. And actually, investing in the cryptocurrency market is considered safe now, insofar as some invest in regards to their retirement plan. So what we need next are the crypto market analysis tools. There are many such tools that allow you to analyze this market in a similar way to the stock market, providing similar metrics. Including coin market cap, coin stalker, cryptoz, and investing. Although these metrics are simple, they provide crucial information about the crypto under consideration. For example, a high market cap indicates a strong project, a high 24-hour volume indicates high demand, and the circulating supply indicates the total number of coins of that crypto in circulation. Another important metric is the volatility of a crypto. Volatility is how much the price of a crypto fluctuates. The cryptocurrency market is considered highly volatile, charging in a moment can generate a lot of profits or make your hair stand on end. So what we are looking for is a crypto that is stable enough to give us time to make a calculated decision. Currencies like Bitcoin, Ethereum, and Ethereum-classic (not specifically) are considered stable. Being stable, they must be strong enough, so that they do not become invalid or simply cease to exist on the market. These characteristics make a crypto reliable, and the most reliable cryptocurrencies are used as a form of liquidity.
When it comes to the crypto market, volatility comes hand in hand, but so does its most important property, namely decentralization. The cryptocurrency market is decentralized, what this means is that falling price on one crypto does not necessarily mean a downward trend for any other crypto. Thus giving us an opportunity in the form of what are called mutual funds. It is a concept of managing a portfolio of the cryptocurrencies you invest in. The idea is to spread your investments across multiple cryptocurrencies to reduce the risk involved if any crypto starts on a bearish run.
Similar to this concept is the concept of indices in the crypto market. Indices provide a standard benchmark for the market as a whole. The idea is to choose the main currencies on 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 currencies would now not consider coin ‘X’, but would instead start considering coin ‘Y’, which has taken his place. Some providers like cci30 and crypto20 have tokenized these Crypto indices. While this may seem like a good idea to some, others are opposed due to the fact that there are some prerequisites to investing in these tokens, such as that a minimum amount of investment is required. While others, such as Cryptoz, provide the methodology and value of the index, along with the components of the currency, so that an investor is free to invest the amount they want and choose not to invest in a crypto that would otherwise be included in an index. Therefore, indices give you the option to further smooth 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 staggering and proof enough of its authenticity. The biggest concern investors have is volatility, for which there had been a solution in the form of indices.