Expert Shares the Best Ways to Track and Comprehend Bitcoin Market Data When Trading Crypto Assets
After a prosperous 2017, where many cryptocurrencies reached new all-time highs, 2018 came just as equally strong a disaster. However, the crypto market survived, which many took as proof that cryptocurrencies are going to stick around and that long-term investment may end up being profitable after all.
Of course, the risks are still as high as ever due to volatility and various other problems. However, the longer crypto investors remain in the market, the more they learn about it, its challenges, but also new opportunities that may arise from time to time. And, despite the market crashes in 2018, new investors continue to arrive, with even institutions finally taking notice and developing an interest in the new and exciting sector.
Even though the crypto space may be a land of opportunity for many, it can also be quite overwhelming for newcomers who have yet to learn all there is to know about the markets' behavior. Even the terminology itself can be a lot to handle during the first steps in the crypto industry, which is why new investors might need some useful tips regarding the market. Here are seven of them that newcomers to the crypto space might find useful.
7 Tips Crypto Newcomers Will Find Helpful
Coin Supply and Market Cap
One of the first thing that new investors need to learn is a bunch of new terms regarding the markets, trading, and coins, in general. Things like the circulating supply of a certain coin, as well as its market cap, are crucial pieces of knowledge when researching a coin. Market cap of any coin, for example, is used for determining the coin's total value. It is calculated very easily, and all that it takes is to multiply the coin's current price by its circulating supply.
It is also important to use circulating supply, rather than total supply. The total supply is how much coins of a certain cryptocurrency is ever going to exist, while the circulating supply marks the number of coins that are already released into the market.
Keep Track of the New Market Conditions
The crypto space advances rapidly, and changes can come within minutes, or even seconds. This is why it is important to always stay updated with new reports and news of any trends, changes, or events that might have an impact on the market.
There is also an easier way of keeping track of what happens to the coins, as well as markets themselves. This includes the use of websites that are updating coins' prices and other details, such as CoinMarketCap, CryptoCompare, Coincap, or TradingView. There are many other similar sites out there that allow investors to keep track of their favorite coins in real time, as well as see the changes that happened in the past 24 hours, 7 days, 1 month, and alike.
Learn From the Best
The crypto market is something that you can never learn completely, as there is always more knowledge to be gathered, arriving from changes and natural evolution. There is no established path that a new investor can take that will lead to them becoming a professional, and learning takes time and experience. Because of this, it might be a good thing for many to start by doing what the professionals do, and try to understand their decisionmaking.
There are websites and crypto-related forums where professional investors share their trading practices, knowledge, and provide hints of what might be a smart trading decision. This is called social trading, and new investors, in particular, can make great use of it while they themselves are learning what to do and how to read the market.
Don't Put all of Your Eggs in One Basket
This may sound obvious at first, but a lot of traders and investors need to be reminded from time to time that the key to making a profit lies in diversification. This is good advice for any kind of market, but when it comes to cryptos — it is essential not to bet on a sole coin, no matter how successful it may seem to be.
Diversify your portfolio and invest in different coins, especially if they if they aim to serve different purposes. Of course, this also does not mean that you should give up on your non-crypto investments, as there are many opportunities out there, and crypto is still shrouded in uncertainty.
Learn What Affects the Coins' Prices
Cryptocurrency prices are going up and down all the time. In the entire recent year, the coins were losing value, with only a few short breaks from time to time where it seemed that the situation might get better. But, what influences these things? Why are the coins jumping up and down without warning?
Well, the first thing to realize is that they are warnings, although they tend to appear just as abruptly as the changes in the market itself. There are many things that affect the prices, such as supply and demand, news regarding new coins, new wallets, new exchanges, hacks, important updates, and many, many other things.
The nature of coins is another big factor. As cryptocurrencies try to reach mainstream adoption, those cryptos that have more practical use cases will be the most interesting ones. As a result, they will be traded and used more, which will give them a higher price. There is also mining, which increases the coins' supply, although the difficulty in mining coins may ultimately make the circulating ones more valuable.
Always Do Your Research Before Investing
One of the reasons why ICOs failed in 2018 is the fact that investors did not bother with doing a lot of research about the new coins that were being offered to them. In late 2017, the prices boomed, and each new coin that appeared had the chance to skyrocket nearly immediately. Investors were in a rush to buy as many of the cheap coins as possible and watch them gain value before trading them off.
However, in their rush, they did not do a proper check of what they are investing in. As a result, many lost their money to scammers or simply bad projects which were unable to survive once the crypto winter struck. A mistake like that is not only a missed opportunity but also a huge loss of the initial investment, especially if it was a large one.
This is not something that affects major coins that much, as they already managed to establish themselves and prove that they are the real deal. However, it is always smart to do a thorough background check of everything regarding the coin, so that you can be sure about what you invest in.
The Prices are Very Unstable
Finally, new investors should prepare to deal with volatility. We have mentioned this several times already, but it is that much more important for it to stick — the crypto market is very volatile, and prices never sit still. While there are many price predictions out there, we have already covered that there are also countless things that may affect the value of any coin at any time.
As a result, it is nearly impossible to predict the prices, as no one can predict the future. Researchers and analysts are giving it their best shot, but all they can do is provide educated guesses after studying the patterns in coins' behavior. However, this does not mean that it is time to cash out whenever the prices start dropping.
Even though there are many crypto traders out there, a lot of those who deal with digital currencies are in it for the long run. In other words, they make long-term investments, and they are prepared to wait for several years if need be before they can see any profit.