The crypto landscape is very dynamic. New cryptocurrencies are introduced to the market daily, and current ones grow or shrink at unprecedented rates. New exchanges are launched to trade these cryptocurrencies, and old ones change their policies or shut down. It is difficult for individual investors to keep track of the latest developments in this rapidly evolving environment.
This makes it easy for traders to miss some of these changes as they happen. This article will provide an overview of 5 common crypto market trends that you should know about so you do not end up missing important opportunities.
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- Market Capitalization of individual coins
Many cryptocurrency enthusiasts pay more attention to the market capitalization (market cap) of an entire coin rather than on its price. This is because some traders feel that paying close attention to the whole crypto space will give them enough indication on how they should invest or trade their assets.
However, while it is true that a market cap can give you a clue on how bullish or bearish the market is, it does not necessarily mean that you should always completely ignore individual coin prices.
- Coin Volume
In the same way that you should monitor a coin’s market cap, it is equally important that you pay attention to how much of an asset is traded on daily basis. In fact, some investors find this statistic more useful than market cap because they believe individual prices have less impact on how an asset will perform compared to its trading volume.
The coin volume can provide a lot of useful information. You can easily spot the volume that is being generated from good old-fashioned trading, and also determine how much of a coin’s traded volume is coming from newly created sell orders.
- Coin Transaction Volume
Trading volume is not the only thing you should monitor when it comes to an individual coin. You can also pay attention to how often users are using that coin by checking on its transaction volume (the number of coins that were sent in a certain timeframe). This information can be easily found on most cryptocurrency exchanges.
- Coin Price
Many traders have this tendency of putting their money in cryptocurrencies that they believe will give them the highest returns. While this approach may be true for some cases, it is not always advisable to completely ignore price considerations when trading or investing in cryptos. Remember, you are buying a cryptocurrency because you have seen its potential to grow in value in the future.
- Historical Prices of Cryptocurrencies
Historical prices are also an important factor that you should monitor when it comes to assessing a coin’s potential for growth. For instance, if you are planning to invest in Bitcoin, it is advisable to check on its price history before shelling out your hard-earned money.
Also, by checking on the history of prices, you will be able to get more information on how cryptocurrencies respond to certain events. This can help you better predict what could happen in the future.
Conclusion
There are many more factors that you can monitor when it comes to assessing the status of a cryptocurrency, but the ones discussed in this article are some of the most common. By paying attention to these 5 factors, you will surely be able to make smarter investment decisions based on real market data rather than just relying on hunches.
These are just some of the tips for trading cryptocurrency that you should always keep an eye on. If you want to learn more about them, or if you want to know how they can affect your trading decisions, then keep checking out for our latest articles and guides.
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