Cryptocurrency has been around for a long time, and there are several papers and publications on the subject. Cryptocurrencies have not only grown in popularity, but they have also established themselves as a new and secure investment option.
The crypto industry is still new, but it is mature enough to provide sufficient research and trend prediction data. Though it is often regarded as the most volatile market and a high-risk investment, it has recently become predictable to a degree, as seen by Bitcoin futures.
With minor adjustments and changes, many stock market ideas have now been applied to the crypto market. This is another example of how many individuals are embracing the cryptocurrency market daily, with over 500 million investors now participating. Even though the entire market capitalization of the crypto market is $286.14 billion, or about 1/65th of the stock market at the time of writing, the market potential is quite large, given its success and the presence of already established financial marketplaces.
The reason behind this is because people have begun to believe in the technology and goods that underpin cryptocurrencies. This also implies that crypto technology has established itself to the point where businesses have decided to store their assets as crypto coins or tokens. With the popularity of Bitcoin, the notion of cryptocurrency gained traction.
Bitcoin, which once used to be the only Cryptocurrency, now contributes only 37.6% to the total Cryptocurrency market. The reason being, the emergence of new Cryptocurrencies and the success of projects backing them. This does not indicate that Bitcoin failed market capitalization Bitcoin has increased, rather what this indicates is that the crypto market has expanded as a whole.
These facts are enough to prove the success of Cryptocurrencies and their market. And in reality investment in the Crypto market is considered safe now, to the extent that some investors as for their retirement plan.
Therefore what we need next are the tools for analysis of the crypto market. Many such tools enable you to analyze this market like the stock market providing similar metrics. Including coin market cap, coin stalker, cryptos, and investing. Even though these metrics are simple, they do provide crucial information about the crypto under consideration. For example, a high market cap indicates a strong project, a high 24hour volume indicates high demand, and circulating supply indicates the total amount of coins of that crypto in circulation.
Another important metric is the volatility of crypto. Volatility is how much the price of crypto fluctuates. The Crypto market is considered highly volatile, cashing out at a moment might bring in a lot of profit or make you pull your hair. Thus what we look for is a crypto that is stable enough to give us time to make a calculated decision. Currencies such as Bitcoin, Ethereum, and Ethereum-classic (not specifically) are considered stable. With being stable, they need to be strong enough to not become invalid or simply stop existing in the market. These features make crypto reliable, and the most reliable Cryptocurrencies are used as a form of liquidity.
As far as the crypto market is concerned, volatility comes hand in hand, but so does its most important property i.e. Decentralization. The Crypto market is decentralized, what this means is that the price fall in one crypto does not necessarily mean a downtrend of any other crypto. Thus giving us an opportunity in the form of what are called mutual funds. It's a Concept of managing a portfolio of the cryptocurrencies that you invest in. The idea is to spread your investments to multiple Cryptocurrencies to reduce the risk involved if any crypto starts on a beer run.
Similar to this concept is the concept of Indices in the crypto market. Indices provide a standard point of reference for the market as a whole. The Idea is to choose the top currencies in the market and distribute the investment among them. These chosen cryptocurrencies change if the index is dynamic and only considers the top currencies. For example, if a currency 'X' drops down to 11th position in the crypto market, the index considering the top 10 currencies would now consider currency 'X', rather start considering currency 'Y' which have taken its place.
Some providers such as cci30 and crypto20 have tokenized these Crypto indices. While this might look like a good idea to some, others oppose it because there are some pre-requisites to invest in these tokens such as a minimum amount of investment is needed. While others such as cryptos provide the methodology and the index value, along with the currency constituents so that an investor is free to invest the amount he/she wants to and choose not to invest in crypto otherwise included in an index. Thus, indices give you a choice to further smooth out the volatility and reduce the risk involved.
Conclusion
The crypto market might look risky at first look and many might still be skeptical of its authenticity, But the maturity that this market has attained within the short period of its existence is amazing and proof enough for its authenticity. The biggest concern that investors have is volatility, for which there had been a solution in form of indices. Also, look for NFT crypto.
