Cryptocurrencies have been around for a while and there are multiple papers and articles on the basics of cryptocurrency. Cryptocurrencies have not only boomed, but have opened up as a new and reliable opportunity for investors. The crypto market is still young, but mature enough to input an adequate amount of data to analyze and predict trends. Although it is considered to be the most volatile market and a huge gamble as an investment, it has now become predictable to a certain point, and Bitcoin futures are proof of that. Many of the concepts of the stock market have now been applied to the crypto market with some modifications and alterations. This gives us another proof that many people are adopting the cryptocurrency market every day, and currently there are more than 500 million investors present in it. Although the total market capitalization of the crypto market is $286.14 billion, which is approximately 1/65 of the stock at the time of writing, the potential of the market is very high given its success despite its age and the presence of already established financial markets. The reason for this is none other than the fact that people have started to believe in technology and products that support crypto. It also means that crypto technology has proven itself so much that companies have agreed to put their assets in the form of crypto coins or tokens. The concept of cryptocurrency became successful 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 for this is the emergence of new cryptocurrencies and the success of projects that support them. This does not mean that Bitcoin has crashed, in fact the market capitalization of Bitcoin has increased, but what it indicates is that the crypto market as a whole has expanded.
These facts are enough to prove the success of cryptocurrencies and their market. And in reality, investing in the Crypto market is now considered safe, to the extent that some invest as if it were their retirement plan. Therefore, the following are our crypto market analysis tools. There are many such tools that allow you to analyze this market in a way similar to that of the stock market with similar indicators. Including coin market cap, stalker, crypto and investing. Although these metrics are simple, they provide crucial information about the cryptocurrency under consideration. For example, a high market cap indicates a strong project, a high 24-hour volume indicates high demand, and a circulating supply indicates the total amount of coins in circulation for that cryptocurrency. Another important metric is cryptocurrency volatility. Volatility is how much the price of a cryptocurrency fluctuates. The crypto market is considered to be very volatile, cashing out at a moment’s notice can bring big profits or make you pull your hair out. So what we are looking for is a cryptocurrency that is stable enough to give us time to make a calculated decision. Currencies such as Bitcoin, Ethereum and Ethereum-classic (not specifically) are considered stable. Since they are stable, they must be strong enough, so that they do not become invalid or simply cease to exist on the market. These features make cryptocurrencies reliable, and the most reliable cryptocurrencies are used as a form of liquidity.
As far as the crypto market is concerned, volatility goes hand in hand, but so does its most important feature, decentralization. The crypto market is decentralized, which means that a drop in the price of one cryptocurrency does not necessarily mean a downward trend in any other cryptocurrency. This gives us an opportunity in the form of what are called mutual funds. It is the concept of managing a portfolio of cryptocurrencies in which you invest. The idea is to spread your investments across multiple cryptocurrencies to reduce your risk if any one cryptocurrency goes on a run
Similar to this concept is the concept of indices in the crypto market. Indices provide a standard reference point for the market as a whole. The idea is to choose the best currencies on the market and spread your investment among them. These selected cryptocurrencies change if the index is dynamic in nature and only takes into account the best currencies. For example, if currency ‘X’ falls to the 11th position in the crypto market, the index that considers the top 10 currencies will now not consider currency ‘X’, but will start considering currency ‘Y’ which has taken its place. Some providers like cci30 and crypto20 have tokenized these Crypto indices. While this might seem like a good idea to some, others are against it due to the fact that there are some prerequisites for investing in these tokens, such as a minimum investment amount required. While others, such as cryptoz, provide the methodology and value of the index, along with the constituent parts of the currency, so that the investor is free to invest the amount he wants and choose not to invest in the cryptocurrency that is otherwise included in the index. So indices give you the choice to further smooth out volatility and reduce the risk involved.
Conclusion
The crypto market might seem risky at first glance and many might still be skeptical about its authenticity, but the maturity this market has achieved in the short period of its existence is incredible and proof enough for its authenticity. The biggest concern of investors is volatility, for which there was a solution in the form of an index.