Cryptocurrency Basics: An essential metric to evaluate encryption assets
The cryptocurrency world has experienced rapid growth and volatility in recent years, and some have actively suffered explosive price peaks, while others have fallen sharply. As a result, investors and analysts must carefully assess the basic elements of the cryptocurrency asset.
In this article, we will deepen the main metrics used by financiers to assess cryptocurrency and give an overview of their importance in determining the proposal of the encryption value.
1. Market capitalization
Market capitalization (maximum market) is a widely recognized metric that reflects the total value of shares or currencies in the cryptocurrency asset. It can be calculated using the formula: market market = Total delivery / 2. This metric provides an indication of the size of the market, and later how much liquidity exists.
Market capitalization is essential to determine the overall value of encryption, as it affects its negotiations, investors’ interest and market feelings. For example, if the cryptocurrency has high market content, investors are likely to be interested in buying or selling an asset that can increase prices.
Bid. Offer and Search
Offer and demand are critical factors affecting the price of cryptocurrencies. The balance between buyers and vendors is very important to determine whether the asset price will increase or fall.
There are two main types of supply and request:
* Seller -Oriented Request : This happens when investors want to buy cryptocurrency at the lowest point, raising prices.
* Buyer -Oriented Request : On the other hand, if the buyer is less than sellers, prices tend to decline.
Fund managers use shots such as stock exchange sales (TVL), currency market capitalization and price/profit ratio (p/e) to assess supply and demand. The high TVL points to a growing investor community, while lower TVLs may indicate interest in active decline.
3. Trade volume
The amount of negotiations is another major metric that measures the amount of purchase and sales activities in exchange. It provides information on market sentiment, liquidity and price stability.
The high volume of negotiations may indicate high demand for cryptocurrency, which can increase prices. On the other hand, the low volume of negotiations may indicate the lack of interest in asset or increased volatility.
4. Market capitalization vs. Delivery
The substrate aspect to be taken into account when assessing cryptocurrencies is its supply and demand level (SMDR). This metrics measure the difference between active market capitalization and its overall delivery.
If the SMDR is high, it may indicate that there are more buyers than sellers that can lead to high prices over time.
5th price proportion/profit (with/e)
The action of cryptocurrency and its benefits with the action relationship and compares. This metric helps investors understand whether asset is underestimated or overestimated compared to their peers and industry reference parameters.
Higher relationships may indicate that the prize is negotiated, while the lower proportion shows that its price is fair.
6. Essence
Volatility refers to fluctuations in cryptocurrency prices in a short period of time. High volatility can be beneficial for investors looking for high returns.
Fund managers use metrics, such as the daily standard of negotiations (DP), or the average time between price changes to assess active volatility.
7. Technical indicators
Technical indicators provide information on the trends and models of the underlying cryptocurrency. They can be used in conjunction with basic analysis to make informed investment decisions.
