[ad_1]
Some metrics are used over and over again to help technologists claim a kind of supremacy for their protocol. Two of these emerge: transactions per second and market capitalization; however, are these two metrics that matter when you choose which cryptocurrencies to invest in?
The ability to scale cryptocurrencies is constantly in question, and the best way to measure their ability to handle a higher capacity is to observe how many transactions can be processed by a particular cryptocurrency.
The problem arises when it becomes clear that this is a marketing stunt rather than an effective tool for assessing the long-term potential of a currency.
When Bitcoin implemented SegWit, all current problems with unconfirmed transactions have disappeared and, for the time being, there are no more problems with it. Some of the most important questions for investors are: what is the current demand on the system, the protocol that meets these demands and what are the plans to increase capacity in the future?
The other misleading metric is market capitalization, as it often uses the total number of existing currencies rather than the total amount in circulation. This difference is fundamental, otherwise a massive inflation of market capitalization could occur.
For example, this inflation can occur if only half of the coins are circulating. The company holds the other half of the currencies and the current dealing price is applied to all currencies, regardless of whether they have ever been bought or sold.
A better way to assess the market capitalization of crypto-companies is to evaluate the amount of real capital that has been invested in it. This would provide an accurate picture of the global interest the world has in that protocol and remove the financial assessments that may occur when companies count coins not distributed in their market capitalization.
note: these are very simple suggestions and ideas on finding the right metrics to evaluate cryptocurrencies, however, I think these same ideas are extremely powerful to help prevent currency over-valuation.
Prices are rarely important for my long-term analysis, as I do not expect growth to be linear. Volatility is something that I personally love and I have reckoned with: can bring us to the moon, or hell; but without it we will not go anywhere. What matters most is the small details, like the ones I'm mentioning below, that dictate most of everyone's success and failures.
Time spent on the market
It's a really nice article that explains why the timing is so critical, but the bottom line is that if you lose, for example, 10 trading days, during peaks / downs, you could potentially lose more than 50% of all potentials profits. This is, there is a lack of the best 10 days able to lower half-expected returns.
What we should do is actually wait patiently for a good opportunity to buy or sell; instead of worrying, take these opportunities to mediate your losses, re-buy bitcoins, or dig deeper and study techniques that can help you improve forecast accuracy.
TA is definitely a great way to try to better understand the price movements and how you can exploit them for your earnings.
Average annual cost of the dollar
A successful strategy among many traders and investors is to choose a day, every month and only buy the same amount. For example, I try to divide my entry-points into 4 or 5 smaller ones, close to key resistance and support levels, and then I wait for the price to move in the opposite direction and I'm forced to reevaluate, or the orders come in
This is considered a safe strategy because you simply dilute the odds of a longer period of time.
Market values
A key point of my analysis is to look at companies from an objective perspective, in the third person, comparing those that I consider the fundamental values for the success of any cryptocurrency project:
- Technology -> requires the user to adopt it. Understanding how bitcoin works and other cryptocurrencies under the hood is for me the most important value. But just because I like technology and it's easier to spend time around the subject. Choose something you like to do and you will not work one day in life.
- Psychology -> dictate the behavior of the market. If you want a precise tool to understand when it's the perfect time to sell, check the google trends. People try the bitcoin more when the prices are incredibly high. I would say that it is our nature to buy when prices are high due to the excess of FOMO and advertising. That's why it's so important to be against the current when it comes to market movement.
- Business -> called the investor strategy. Consider the following: if the equity asset class is doing well, how do you think the price of long-term assets will behave, such as gold or silver? Interest rates at zero make investors bullish on spending on assets with huge returns, as making games more risky is cheaper due to the fact that money is cheaper to obtain. Do not people say that bitcoin is the new digital gold? What do you think will happen when traditional markets enter a bear run? In my eyes, cryptocurrency could be the answer.
- Philosophy -> dictate the market values. If I did not know, most of the technological problems are also philosophical; if one thinks of scalability, the most burning issue on the adoption of cryptocurrency, it becomes obvious that the discussion is not whether it is possible to scale bitcoins (or other cryptocurrencies), but how it will be done. Will you give up decentralization for efficiency?
I hope these tips will help you in your efforts to become a better investor and trader!
Do not forget: we should only invest what we can afford to lose. Mistakes will be made and money will be lost, however, if you work hard on a balanced strategy, your long-term results will definitely improve!
Rome was not built in a day.
If you really want to succeed in this market, you have to go all-in. No, do not put all your hard-earned money in bitcoins, but immerse yourself deeply in cryptocurrency: by learning about technology, activities, market behavior, AT or any other field you might consider relevant, you will add value to the market because your games will be more precise and you're probably betting on better projects or assets.
The markets are cyclical. If you have lost money now you can always recover it at the next race, which I believe will not come soon.
One of the obvious reasons are ETFs. If, in one hand, bitcoin futures have given institutional investors the opportunity to bet heavily against bitcoins and make double wins, ETFs will have the exact opposite, hopefully.
My final advice is that you can set reasonable goals in your head and do not become too greedy. Be patient and learn as many strategies as possible; with time and stupid enough decisions, knowledge and experience will come!
Disclaimer: this article is not a financial advice; represents my personal opinion e it should not be attributed to CCN. I have some savings invested in cryptocurrency, so take everything I write with a pinch of salt. Do not invest what you can not afford to lose and read as much as possible about a project before investing.
Get an exclusive cryptographic analysis by professional traders and investors on Hacked.com. Register now and receive the first month for free. Click here.
