As the bitcoin price skyrocket, the number of people interested in the market also increases exponentially. This is a natural process that we should be happy about, as this is how the area develops and grows. But how should you value a cryptocurrency as an investment? Today we will present the essential aspects for investing.
The corner numbers behind the cryptocurrency project
Before we even play with the idea of ??whether to buy from a cryptocurrency, it is very important to look at its most important values, these are:
- Complete set
- Quantity in circulation
- ATH (All Time High) - the highest price ever
- ATL (All Time Low) - lowest price ever
- Current price
- Capital value
The entire set is important because it immediately reveals critical information as to whether a given cryptocurrency has a finite or infinite amount. Finite stock is generally preferred by investors because, as we have learned from bitcoin, it pushes up the price in the long run, provided that demand also increases. Rising demand is a condition that cannot be ignored, if it is not met, the price will never go up.
An unlimited amount of crypto money can also increase in value, but this requires a strong foundation.
The quantity in circulation is also an important consideration, it shows how many pieces of the given cryptocurrency are currently on the market. This complements our picture of the entire set, but is not as decisive as the former factor.
It is especially important to look at the entire stock because it says a lot about how long the capital value, the corner number referred to as the market cap in English, can go. This is the product of two other values, the current price, and the total stock. So with a simple calculation, we can always determine the size of the market cap, but collection sites like CoinMarketCap or CoinGecko also report it.
Of course, there is no upper limit, the capital value of a cryptocurrency can be as high as thousands of billions of dollars, the only question is how viable it is. For example, if the total stock of a cryptocurrency is one hundred million pieces, it is easy to see that it can realistically reach a value of one dollar, even five dollars, as a capital value of one hundred million or even five hundred million does not make the project unrealistically large in international markets.
However, the situation is radically different if, for example, the total stock is five hundred billion, since in this case the value of one dollar (through many years of work, with great success) is still only achievable, but a hundred dollars is almost ruled out, as a we get an astronomical capital value, which may no longer be realistic.
The ATH (All-Time-High) and ATL (All-Time-Low) values ??are important because they tell a lot about the life cycle of cryptocurrency so far. In general, we view ATH, the highest value ever achieved, as a price that you might be able to reach again if the market develops favorably. And the ATL, the lowest value so far, is important because it serves as a good benchmark against which to assess how good a boarder is at the current price. If the project seems good, viable, and the current price is close to the ATL, then it is a good boarder, but if it is much higher, and even closer to the ATH, it is only worth boarding if we have good reason to believe in it. that its exchange rate will rise much higher than its previous peak.
Needless to say, a thorough examination of the current price is also important, if for no other reason, because it determines how much we can buy from a given cryptocurrency. Let’s look at how long we can estimate its value to go, let’s calculate how much we need to buy to make it worth the investment.
How long can the value of a given cryptocurrency go?
It’s worth comparing our chosen cryptocurrencies to other projects that have a similar total amount. If we see another cryptocurrency that has a very similar total inventory, but the current price is higher than the selected project, we can assume that it will reach that value. Provided, of course, that the selected project rests on a similarly good foundation.
What are the fundamentals of cryptocurrency
We have arrived at the most important aspect of evaluating the altcoin project; the foundation, the foundations of the project, determine everything. There are many different categories in this market, there are platforms on which we can develop decentralized applications, others such as Ethereum or Cardano. There are privacy coins that focus on anonymous transactions, such as Zcash or Monero. There are also projects that serve some kind of privileged task, such as serving supply chains, it is worth mentioning VeChain or even Waltonchain here.
There are nearly ten thousand cryptocurrencies currently on the market, each with a different purpose, creed. Assuming that the initiative has any purpose, unfortunately we also see a lot of coin that was created only with the hope that one day it will go up in value, and that those who created it can do well.
It is essential that we take a close look at the results so far, because only from this can we assess whether our chosen one has a future. We need to consider the following aspects:
-Partner partnerships by name and number
-Achievements in the market that is the focus of the project
-Preparation and composition of the team
These parameters are always subject to individual judgment. For example, if it’s a blockchain-based music platform, you need to find out how many musicians they’ve already collaborated with. If the project is two years old and they are still working with only twenty bands, that is not a good sign. In contrast, if the platform was launched barely a year ago and there are already nearly ten thousand musicians, more than fifty thousand, then we can feel that they are heading in the right direction.
When it comes to a blockchain project serving supply chains, we need to look at exactly who they are working with and in what quality. Having family and small businesses among the partners, and not too many of them, is not necessarily a good sign. However, if they sign a new agreement with the largest companies in the world almost every week, it is clear that they are making good progress.
Of course, a project that is currently performing poorly can also be a global success, and a coin that is currently soaring can also go into the sink.
Competitors of a coin or token
Needless to say, if a cryptocurrency serves a purpose that is already solved by three others, and there are good solutions to a given problem in a world outside of cryptocurrency, then that particular team may not be doomed to success.
But it’s not scripture either, everything can be done a little differently, a little better, you can never know exactly who is succeeding and who is bleeding. In any case, these are the main considerations. Let’s start by looking at the numbers, look at the capital value, the total stock, and the current price, and then compare it to other coins. But in addition to examining the numbers, it is essential that we also address the fundamentals, thoroughly review their introductory side, examine, research, and draw our own conclusions.
I wish everyone a lot of success in the world of cryptocurrency investing! :)
