How to Understand Cryptocurrency Trends

by | Jan 4, 2022 | Finance And Investment

If you’ve ever looked at cryptocurrency charts and felt overwhelmed and confused, you’re not alone. Tracking investments of any type is challenging and requires some knowledge to understand what charts and other information is saying about current trends. The following tips will help you understand cryptocurrency trends.

Market Cap and Circulating Supply

One way you can determine the current state of the cryptocurrency market is by looking at the market cap and the circulating supply. The market cap refers to the total value of the coins available on the public market. You can reach this number by multiplying the circulating supply by the individual value of one cryptocurrency coin. However, keep in mind the circulating supply is lower than the total supply because it only includes publicly available coins, not those that are traded privately and unavailable to the general public.

Factors Affecting Cryptocurrency Price

Many investments are guided by the price of gold and other precious metals. However, cryptocurrency isn’t backed by any of these. Supply and demand plays a significant role in the value of cryptocurrency at any given time, but it isn’t the only factor. Do your research into each cryptocurrency you’re interested in and determine whether there are practical applications. Options that have several applications are in higher demand and are more likely to increase in value. Mining difficulty can also impact the price. Reading current headlines can help you determine which cryptocurrencies will be your best investment.

Follow Seasoned Investors

If you’re new to the cryptocurrency market, it’s easy to make mistakes in interpreting data. One way you can combat this problem is to follow seasoned investors who have dealt in cryptocurrency for years. These individuals are often willing to share their experience and tips to help new investors get started on the right foot.

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