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Cryptocurrency Market Data Explained in 7 Points

Maya Mandzikasvili | Feb. 6, 2019
Cryptocurrency Market Data Explained in 7 Points

February 6, 2019, | AtoZ Markets - For those who are still new to the investments in cryptos, the wide range of investment options and the new terminology may seem overwhelming. Understanding the area you stepping into will help to make smarter investment decisions.

Crypto still considered a risky business but with big opportunities

2018 was a rough year for the cryptocurrencies in particular and the blockchain overall. Numerous ups and downs occurred with bitcoins and other major cryptocurrency providers. However, despite all the events that have occurred over the last year on the cryptocurrency market, it has proved that it is going to hold on for a long time.

Although there is still a risk in cryptocurrency, and financial giants such as Warren Buffett consider it to be just a blown-up bubble, many investors start to understand not only the problems but also the opportunities associated with cryptos.

As a result, more people are entering the cryptocurrency sphere than ever before. To avoid losing your way on the path of digital assets, the following tips might help how to do everything right.

1.Know the connection between market capitalization and negotiable supply

The market capitalization for a particular coin is used to determine the total value of the coins on the market. This number is determined by multiplying the negotiable supply of a coin by its current price. The use of a circulating sentence, rather than a general sentence, is an important distinction. For various reasons, some coins are not available in the public market. Since they are not available for trade, they are not taken into account in price considerations or in market capitalization.

2.Keep up to date with current market conditions

It is necessary to use all available information resources to know what is currently happening on the market. These can be articles discussing the pros and cons of various cryptocurrencies, but current market data will always be the most reliable source for identifying trends and making smarter trading decisions.

There are also a large number of websites like Coincap, CoinMarketCap, and CryptoCompare designed to provide the latest updates on changes in price, supply and market capitalization. The data on these online resources, updated in real time, are combined with graphs that track changes over the 24-hour and seven-day periods to give investors a better idea of current trends.

3.Use guidance from top investors

When real-time data on cryptocurrencies is combined with recommendations from leading investors, you can be more confident in your decisions and even learn a few additional pointers along the way. Some sites, such as eToro, use a social trading program that allows lead investors to share their knowledge and trading techniques.

Recommendations from the experienced traders can serve as a guide for building an investment strategy. Acquiring good habits at an early stage of the investment path helps to avoid making impulsive decisions that can lead to disaster.

4.Why diversification is so important?

As in the case of traditional investment opportunities, diversification is necessary for financial gain in cryptocurrency. Due to a more diversified portfolio, the overall risk is reduced, especially if the money is invested in coins and tokens serving various sectors. It also means that you need to continue to invest in the non-crypto sphere. These methods maximize potential revenue while reducing risk, in case a particular coin or stock falls. Cryptos and tokens are recommended to be stored in a cryptocurrency wallet. These digital wallets serve as a centralized center for receiving and sending crypto transactions. Keeping diversified investments in a secure wallet will make it easier to track investments.

5.Being aware of the factors that influence pricing is vital

It is extremely important to understand what causes cryptocurrency prices to rise and fall. Having such information will help to predict upcoming changes in the cryptomarket.

Demand and supply, of course, play an important role in the fluctuations of the market of digital assets. However, another important factor worth new-coming traders attention is the perceived usefulness of a particular cryptocurrency. If a coin is perceived as having several practical applications, it will be more in demand and, therefore, will increase in value.

The complexity of crypto mining is another important factor affecting pricing. The higher it is, the more difficult it is to obtain an additional unit of a coinю This may affect the perceived value of the coin and, therefore, its price, since increasing the supply of a coin will require more processing power to use in the mining process Experienced investors should also pay attention to the news about various coins and tokens. Positive or negative articles often have a direct correlation with future price trends.

6.Digital assets research helps to avoid scammers

It is necessary to investigate individual coins and tokens in order to avoid fraudsters. Although many crypto products have proven to be worthy investments, other tokens and coins turned out to be fraudsters, some of which cost millions of dollars to investors.

Although this does not represent a big risk for any of the main, more well-known cryptocurrencies, anyone who is considering investing in a new coin or token should do thorough research before making a deal. In addition to studying market news, resources Like all Crypto Whitepapers can greatly help investigative actions. This document contains all the technical details of cryptocurrency, marketing plans and much more so that you can better understand what they have to offer.

7.Preparing for volatility

It is impossible to predict what will happen on the market with 100 percent accuracy. It concerns the cryptocurrency. Panic over daily changes in market value can lead to an impulsive decision and a failed transaction. The stock market provides valuable lessons in order to cope with volatility, as global stock markets are not used to a sudden rise and fall in prices.

Thus, many traditional lessons and tips on working with volatility also apply to cryptocurrencies. Many of these methods emphasize the value of long-term investments, focusing on future returns, rather than daily price fluctuations.

Even short-term investors need to show some patience and look at the big picture. Understanding that volatility is part of the crypto investment, and that significant growth is possible in the long run will help make better decisions.

Despite the seemingly endless claims that cryptography is over-hyped or already dead, it is clear that this investment option is here to stay. Becoming an informed investor, you can now stay one step ahead and be more prepared for future market shifts.

Think we missed something? Let us know in the comments section below.

Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ Markets.com, nor should they be attributed to AtoZMarkets.