In Crypto investment or cryptocurrency, choosing a coin to trade determines more than 50% of success or failure. This article will provide you with basic and necessary knowledge about choosing suitable coins, as well as analyzing the strategies and tools commonly used when investing in cryptocurrencies. Let's get started!
To know how to choose a "good" coin, we must understand the factors that influence them, including Blockchain technology. Cryptocurrency and blockchain technology are two independent entities, but they complement each other. Cryptocurrency is a special product of blockchain technology; in other words, blockchain technology is the underlying technology that "backs" famous cryptocurrencies.
Thus, besides being dependent on the law of supply and demand or market fluctuations like other investment portfolios, cryptocurrencies are also influenced by technological factors, supply, and community support.
1 Liquidity of the coin
This is the most important factor that any investor should be concerned about. The higher the liquidity, the easier it is to convert that asset into cash or another type of asset without reducing or losing its value.
Among these, circulating supply, trading volume, market capitalization, and community support are important factors that determine liquidity.
Just like on the exchange, the liquidity of a coin allows investors to be more flexible in their investment decisions.
2 Intrinsic value of the coin
If you are a long-term investor, you care about the investment portfolio because you believe it is a sustainable value that is not affected by market factors; the intrinsic value of the coin in the portfolio is the most important criterion you should aim for.
The intrinsic value of a cryptocurrency includes the underlying technology, techniques, and its applicability. Furthermore, the development team - those who make important decisions for the survival of a coin - is also a factor that investors care about.
3 Supply of coins
Unlike stocks or Forex - where companies can issue additional shares or governments can print more money, coins have very limited supply; and they are created through mining.
Of course, not all coins are like that! However, based on the scarcity in the law of supply and demand, the limited supply of coins prevents their market price from inflating in the long term. In addition, the mining cost also affects the supply of coins.
4 Community support
There is no need to discuss this criterion further! Investment types that receive community interest will tend to exist longer than other coins. The more people who support it, the more people will know about and invest in it, thus increasing liquidity. Additionally, having more investors will increase the value of that coin due to the scarcity of the law of supply and demand.
Thus, a "good" coin can be based on many factors, and these factors complement each other. The more criteria that are met, the safer the coin and the more sustainable value it brings to the investor.
However, a coin that appears on the market is still influenced by other short-term factors. As a smart investor, be mentally prepared to "adapt" to the market!
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