Factors to Spot in a Cryptocurrency Before Investing in It
The cryptocurrency market that started to gain popularity since the inception of Bitcoin (BTC) in 2009 has gained acceptance among everyone. Whatever one’s perception of cryptocurrencies, no one can deny their meteoric rise over the last few years. Because of such universal adoption and the uses of cryptocurrencies and how they may well be on their way to writing your future, many people have jumped on the bandwagon, most without sound prior knowledge. This leads to many newbies making thoughtless investments into dubious cryptocurrencies. Before investing in them on any crypto exchange in Australia, here are a few factors to consider.
Market capitalisation refers to the sum of the total number of coins that have been mined and are in circulation in the market. A cryptocurrency with a high market cap signifies that it has been widely accepted and adopted by investors who have faith that the coin will do well in the future. For instance, the most popular cryptocurrency today is Bitcoin, which has the highest market cap compared to other altcoins.
All top cryptocurrencies often hold higher positions in the coin charts when it comes to market cap. This wouldn’t necessarily mean that a coin in the 25th position has no significance, as market capitalisation is just one factor to consider when evaluating a cryptocurrency’s significance.
But it is safe to say that when compared to most other altcoin projects, the coins that hold a high position in the charts can be trusted and are worth looking into, as many key players of the market, including large financial institutions, would have invested great sums of money after doing in-depth analysis on them.
The Fundamentals of a Cryptocurrency
A good investor would always analyse finding a few highly sought-after cryptos. One has to carefully look for the motives, objectives, plans and scope, the coin’s performance in the market over time, the company running the project and its board of members, and the adaptability of the coin. Blindly pouring hard-earned money into just any crypto would not be short of a blind gamble. Only when one understands to read these technicalities and separates the good projects from the bad ones should they go on to invest their money in the cryptocurrencies on a well-established crypto exchange in Australia.
As relatively new investment options, when compared to stocks, bonds, commodities and land, cryptocurrencies are subjected to high volatility compared to the other options. Some established cryptocurrencies may be highly stable, like Bitcoin and Ethereum, whereas others may not be so. This may be a good or a bad thing depending upon the risk appetite of each investor.
Sometimes, news related to large-cap cryptos, such as Bitcoin and Ethereum spreads, affects the prices of relatively minor cryptos. So, one must be aware of the volatility a coin may exhibit on a reliable crypto exchange in Australia and decide if that is acceptable to them before investing their money.
You should know that cryptocurrency is not authorised as a legal tender in Australia. The cryptocurrency market is highly technical, and people investing in it should understand its various technical aspects before entering it. There is a steep learning curve. But the opportunities to make good gains from it are limitless for those who decide to educate themselves about it and invest in great cryptocurrency projects through a good crypto exchange.