Cryptocurrency has been around for a while and there are many articles and articles about the basics of Cryptocurrency. Cryptocurrency has not only flourished, but also opened up as a new and reliable opportunity for investors. The cryptocurrency market is still young, but mature enough to shed the right amount of data for analysis and predict trends. Although 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 cryptocurrency market with some variations and modifications. This proves to us that many people are embracing the Cryptocurrency market every day and more than 500 million investors are currently involved. Although the total market capitalization of the cryptocurrency market is $286.14 billion, which is about 1/65th of the stock market at the time of writing, the market potential 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 are starting to believe in technology and products that support cryptocurrency. It also means that the crypto technology has proven itself and companies have agreed to put their assets into cryptocurrency in the form of coins or tokens. With the success of Bitcoin, the concept of cryptocurrency has succeeded. Previously the only Cryptocurrency, bitcoin now contributes only 37.6% to the total Cryptocurrency market. The reason is the emergence of new Cryptocurrencies and the success of projects that support them. This does not indicate that Bitcoin has failed, in fact Bitcoin’s market capitalization has increased, but rather that the cryptocurrency market as a whole is expanding.
These facts are enough to prove the success of Cryptocurrencies and their market. And in fact, investing in the Crypto market is now considered as safe as some investing in a retirement plan. Therefore, we need tools to analyze the crypto market. There are many such tools that allow you to analyze this market in a similar way to the stock market that provides similar metrics. Including coin market cap, coin chaser, crypto and investment. Although we think these metrics are simple, they provide important information about the cryptocurrency under consideration. For example, a high market cap indicates a strong project, a high 24-hour volume indicates a high demand, and a circulating supply indicates the total amount of a cryptocurrency’s coins in circulation. Another important indicator is the volatility of cryptocurrency. Volatility is how much the price of a cryptocurrency changes. The cryptocurrency market is considered to be very volatile, cashing out at a time can bring huge profits or 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 particularly) are considered stable. Being stable, they should be strong enough not to become invalid or simply cease to exist in the market. These features make cryptocurrency reliable and the most reliable Cryptocurrencies are used as a form of liquidity.
When it comes to the cryptocurrency market, volatility goes hand in hand, but so does its most important feature, which is decentralization. The cryptocurrency market is decentralized, which means that a price drop in one cryptocurrency does not mean a downward trend in any other cryptocurrency. So it gives us an opportunity in the form of so called mutual funds. This is the concept of managing a portfolio of cryptocurrencies that you invest in. The idea is to spread your investments across multiple Cryptocurrencies to reduce risk if any cryptocurrency starts with a bear.
Similar to this concept is the concept of Indices in the cryptocurrency market. Indices provide a standard reference point for the market as a whole. The idea is to choose the best currencies in the market and spread the investment between them. These selected cryptocurrencies change if the index is dynamic and only considers the best currencies. For example, if currency ‘X’ falls to the 11th position in the cryptocurrency market, the index that considers the top 10 currencies will now not consider currency ‘X’, but instead will start considering currency ‘Y’, which took its place. Some providers like cci30 and crypto20 have tokenized these Crypto indexes. While this may seem like a good Idea to some, others oppose it because there are some prerequisites for investing in these tokens, such as a minimum investment required. While others like Kryptose provide methodology and index value along with currency components, the investor is free to invest whatever amount he wants and can otherwise choose not to invest in the cryptocurrency included in the index. Thus, indices provide an option to further smooth volatility and reduce the risk involved.
The result
The cryptocurrency market may seem risky at first glance and many may still be skeptical of its authenticity, but the maturity this market has achieved in the short time it has been around is amazing and proof enough for its authenticity. The biggest concern of investors is volatility, which is addressed in the form of indices.