Four Factors To Consider Before Investing in Cryptocurrency

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The popularity of cryptocurrency is now growing all over the globe. In the last few years, Bitcoin was the only known crypto. Now there are many coins that are performing well in the market, such as Ethereum, Binance Coin, and Solana, among others. This phenomenon has made many people to invest in cryptocurrency, either for short-term profits or long-term capital gains. When making a decision to invest in cryptocurrency, it is vital to look at the market capitalization, price, circulating supply, and volume of the coin

Four factors to consider before investing in cryptocurrency.
  • Market capitalization. Market capitalization is a popular term in the stock market. According to Cryptocurrency for Beginners: Ultimate Guide For Trading & Investing Bitcoin and Other Top Altcoins, it refers to market value of any outstanding shares of a company. Cryptocurrency trading also behaves like the stock market. This fact means that it is important for an investor to consider the value of outstanding shares of a particular cryptocurrency before making any investment decisions. Besides, one cannot buy shares or cryptocurrencies if they do not exist. Through market capitalization, the investor will be able to know the amount of the currency that they can purchase by considering the outstanding ones in the market. This factor is very vital in determining the availability of a particular cryptocurrency in the market.
  • Price. Price is an important factor to consider in any purchase decision. It represent the value that the buyer gains from the item being bought. Every cryptocurrency available in the market has a price. The most costly cryptocurrency in 2021 is Bitcoin, followed by Ethreum. The price determines the initial offer when buying cryptocurrency, as explained in Cryptocurrency Investing for Dummies. The highly-priced cryptocurrencies are best for short-term profits since a small increase represents a lot of money. The lowly-priced cryptocurrencies, on the other hand, are good for long-term capital gains. This fact means that the owner can sell at a higher price when the value increases with time.
  • Circulating supply. The circulating supply is also an important factor to consider when investing in cryptocurrency. It is the amount of tokens or coins in circulation at a particular time. Cryptocurrency Explained postulates that the circulating supply determines the amount of cryptocurrency that can be bought at any instant. This factor is different from market capitalization since it represents the cryptocurrencies that are available at any time, excluding the ones that are burned. This value can increase or decrease any time, and the amount for a particular cryptocurrency can be accessed in real-time. Therefore, the circulating supply of a particular cryptocurrency is a vital factor to consider when making related investment decisions.
  • Volume. When investing in cryptocurrency, volume represents the trade capacity. It is normally calculated every twenty-four hours. According to Investing & Trading in Cryptocurrencies Using Volume Price Analysis, this value shows how popular a particular cryptocurrency is to traders. This fact means that the most popular cryptocurrencies have the highest volume. This factor is important when making a decision to invest in cryptocurrency because it guides the investor by showing the most traded coins or tokens. Therefore, volume is determined by the amount of cryptocurrency supplied, which is a derivative of market capitalization and the circulating supply.

The cryptocurrency market is dynamic. Besides, variables keep on changing from time-to-time. Therefore, before making investment decisions, it is important to determine the cryptocurrency’s market capitalization, price, circulating supply, and volume.

Joshua Omolo

Founder and Managing Director at Joshua Omolo & Associates Limited (JO&AL). JO&AL is a knowledge-based company whose clarion call is to “help people and businesses get out of the cubicle and create wealth.” The company has combined different methods of making money to create effective resources for beginners and experts. The focus is to conform to the global changes brought about by information technology. JO&AL’s commodity of trade is “Knowledge”. We are a reflection of a transformation that is taking place in our national and global society. Currently, learning is continuously being redefined for formal and lifelong learners in both public and private sectors. Consequently, we deal with affiliates, advertisers, agencies, and entrepreneurs. Our private fora coach individuals interested in leveraging their careers for business.

Joshua Omolo

Founder and Managing Director at Joshua Omolo & Associates Limited (JO&AL). JO&AL is a knowledge-based company whose clarion call is to “help people and businesses get out of the cubicle and create wealth.” The company has combined different methods of making money to create effective resources for beginners and experts. The focus is to conform to the global changes brought about by information technology. JO&AL’s commodity of trade is “Knowledge”. We are a reflection of a transformation that is taking place in our national and global society. Currently, learning is continuously being redefined for formal and lifelong learners in both public and private sectors. Consequently, we deal with affiliates, advertisers, agencies, and entrepreneurs. Our private fora coach individuals interested in leveraging their careers for business.

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