The crypto industry has come a long way over the course of last few years. The main reason behind the cryptocurrency success is its property of being completely anonymous. It’s not operated by any central authority, meaning no one can control and manipulate any procedure associated with cryptocurrencies. One can earn huge profits by trading crptocurrencies, but it’s not as simple as it looks. If you’ve made a mind to invest in Bitcoin, it’s important that you first spend some time researching and understanding Bitcoin. Bearing this in mind, we’ve put together a couple of things that you should know/consider before starting trading bitcoin or any other crypto coin. So read on to learn more.
Market capitalization is a popular metric used to gauge any crypto coin’s value. It’s calculated by multiplying the total number of units of a crypto coin with its current price. Crypto tokens with large circulating supply and high market cap are less susceptible to wild volatility and manipulation, whereas crypto coins with smaller market cap are likely to experience wild price springs on negative or positive news. So, it’s highly recommended that you check market cap prior to investing in Bitcoin or any other cryptocurrency.
In addition to taking a look at market cap, investors should also check the trading volume of a digital asset. It tells you exactly how many crypto coins are acutely being sold and bought on a daily basis. It’s important because it tells how easily one can buy or sell that crypto coin. The low trading volume means it will be difficult to buy and sell a cryptocurrency. So the cryptocurrencies with low trading volume aren’t considered good for investment.