Investing in #crypto can be a bit tricky with all the different factors that govern a coin.π
It's not only the price of a #coin that makes it a good #investment. There are other factors as well.π°
Read along to find out what to look for when buying crypto:π
It's not only the price of a #coin that makes it a good #investment. There are other factors as well.π°
Read along to find out what to look for when buying crypto:π
#NotFinancialAdvice
1. Circulating supply:π
Circulating supply is the amount of #crypto that is already on the #blockchain.π
The higher the circulating supply, the better.β¨
1. Circulating supply:π
Circulating supply is the amount of #crypto that is already on the #blockchain.π
The higher the circulating supply, the better.β¨
https://twitter.com/AGlasgow12/status/1571840478253060097?s=20&t=UWu0qC3a_zZN6Dy5pZ7aew
Suppose a #cryptocurrency has only 50% of its total supply out.β‘
By the time the rest is mined, there will be a 2x inflation in the project's #ecosystem.π
The lower the circulating/total supply ratio, the more #inflation there would be.π
By the time the rest is mined, there will be a 2x inflation in the project's #ecosystem.π
The lower the circulating/total supply ratio, the more #inflation there would be.π
2. Volume/liquidity: The volume of #bitcoin is $40 billion out of the $360 billion market cap.π§
This means around 11% of the total $BTC supply is moving around in the #market.
This means around 11% of the total $BTC supply is moving around in the #market.
https://twitter.com/Washigorira/status/1571845776330067969?s=20&t=45UU9aHul5L1fDe0mck_nQ
A high volume means there is #liquidity in the market.π
And high liquidity ensures that there are funds in the #market.
However, liquidity is a double-edged sword!πβ
And high liquidity ensures that there are funds in the #market.
However, liquidity is a double-edged sword!πβ
Very high liquidity means everyone is either taking their money out of the market or running towards the #market.πΈ
Either way, this can lead to high volatility and fluctuating #crypto prices!β¨
Either way, this can lead to high volatility and fluctuating #crypto prices!β¨
For example, during the $LUNA crash, the liquidity of the #coin increased from the usual $2 billion to $16 billion!π°
This resulted from the hyper-volatility after the crash of $UST and $LUNA.π
This resulted from the hyper-volatility after the crash of $UST and $LUNA.π
3. #Market cap: Now this is a tricky one!
Since #crypto is still in its toddler stage, there is a ton of room for growth.π
But you still have to look out for the potential room for #growth.π
Since #crypto is still in its toddler stage, there is a ton of room for growth.π
But you still have to look out for the potential room for #growth.π
A project with a very high market cap will grow slower than a smaller one.β¨
Looks like Newton's inertia applies to #Finance as well!π
@JamesPelton18 has a unique workaround for this problem.πΈ
Looks like Newton's inertia applies to #Finance as well!π
@JamesPelton18 has a unique workaround for this problem.πΈ
https://twitter.com/brew_defi/status/1570517845129449472?s=20&t=UWu0qC3a_zZN6Dy5pZ7aew
If a large #project looks enticing, the smaller projects accompanying it may also grow.π
And since the smaller #crypto #tokens have more room to grow, there is better potential!π
And since the smaller #crypto #tokens have more room to grow, there is better potential!π
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