3 Important Things to Consider Before Buying Crypto

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Investment in cryptocurrencies has been the new deal in recent years. Of course, the availability of some crypto reports has made investors skeptical about coins in the market. To clear some doubts and establish perfect basic for crypto investment success, I want to touch on three key things investors should not overlook when setting up their portfolio.

I call them the framework of crypto investment. The truth is, digital assets such as Bitcoin (BTC) usually thrive on speculation and other unforeseen forces, but to know and project how they will perform, one should check its available supply, market capitalization, and the team behind it. 

Available Supply

I personally consider available supply as the most important thing when considering a crypto investment. Taking a look at the range of coins in the market, cryptocurrencies that have a small available supply have higher prices.

The truth is, the price of any digital coin is determined by the division of its market capitalization by its available supply. Bitcoin, for instance, has an available supply of 17 million, a market capitalization of $156,999,558,023 and a current price of $9000. Dividing the available supply by the market cap leads to the current price. In respect to this, its future price can equally be predicted by dividing its available supply by a projected market capitalization.

Ethereum (ETH) has an available supply of 99 million. Its current price was determined by the same format. Investors should consider coins with small available supply if they really want a coin that will rise very fast.

Another angle to look at is cryptocurrencies such as Bitcoin cash (BCH) are ranked below Ripple (XRP) because Ripple (XRP) has a larger market cap. However, Bitcoin cash (BCH) is more valuable than Ripple (XRP) due to the available supply difference. Dividing the available supply of Ripple (XRP) by its market cap gives us a price of $0.9.  However, it would have had a higher price if it had a smaller available supply.

Currently, the available supply of Ethereum (ETH) is 99 million, and the Market cap of Ripple (XRP) is $35 billion. Assuming the 99 million available supply of Ether (ETH) is the available supply of Ripple (XRP), dividing the $35 billion market cap of Ripple (XRP) by the assumed 99 million available supply would have ripple trading at $354. This explains why some coins rise very fast in market cap but stay below a dollar.

The smaller the available supply, the higher the price is likely to be, and vice versa.


Market Capitalization

Another important thing investors should understand is the market capitalization of an asset. The market cap of any cryptocurrency literally signifies the number of people holding the coin. When the market cap rises, it means more people are getting hold of the asset, and when it falls, it means more people are converting it into fiat money.

Just as explained above, the market cap plays a key role in determining the price of a digital asset. When a market cap lies below its available supply, the cryptocurrency trades at less than a dollar. When the market cap squalls the available supply in numbers, the price of the asset trades at a dollar, and when it rises more than the available supply, its trade's above a dollar. Investors should understand that every coin in the market lies on the market cap for its price, and should, therefore, be monitored before and after investment to know its performance.

The Team Behind the Asset

One thing I have realized is that some investors jump into the investment of a coin after realizing that its price percentage is green. Even though the two points explained above are important, investigating the team and their efforts are very important. Some coins were created from thin air, and their prices are rising due to speculation. Some have a team but they are making no effort to make sure the coin is successful. Investors should look at a coin with an experienced and dedicated team that works tirelessly to drive the coin to the top.

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Disclosure:

I have received no additional compensation other than the Ethereum that Hade Technologies pays to produce Exclusive content

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