Basic Analysis for Assessing Cryptocurrency

Basic Analysis for Assessing Cryptocurrency

If you want to know how to assess and analyze a cryptocurrency based on market cap, supply volume, and circulating supply, here are a few things you need to know:
Although these three factors must be known by new traders and investors who can be used in building an investment strategy, you should not only rely on these three factors when assessing and choosing cryptocurrency but you need to pay attention to other factors such as the market potential of the technology used, the credibility of the management and development team, the ability and market competition. In addition, market variables such as regulation and trust.


Volume 
Volume is the number of active trades that occur from a particular coin. for example, if Bitcoin has $ 43,250,000,000 in trading volume, and a price of $ 8,650 means there are around 5,000,000 Bitcoin being actively traded. In general, the greater the volume, the better this is for the coin, because the coin will be easy to buy and sell. If the coin has a low volume, then you have to wait longer to sell and it might be difficult to find buyers at the current market price. So you have to keep the coin longer in the market to get the desired price or lower the price so that it can be sold faster. Volume as a metric is a good way to find out whether a coin is healthy or not, because volume shows the public's interest in the coin and the market liquidity around the coin. For example if this means that the coin is becoming more popular and also more liquid then it has the potential to be a good investment.

Market Cap The market cap of a coin is the total value of all coins in circulation and is one of the metrics used to determine value. The general market cap calculation is the last trading price, or average trading price, multiplied by the total supply of coins in circulation. For example Bitcoin, when bitcoin is traded at $ 8,685 USD multiplied by a Circulating Supply that is 18,242,000 BTC will produce a market cap worth $ 158431770000. However this does not consider trading that occurs on-chains or individual-to-individual transactions.


Circulating Supply vs Max Supply
Circulating Supply is a coin that has been mined or distributed coins and is available for sale. While Max Supply is the maximum supply that refers to the total amount of a coin that has been determined by the coin code or script. (eg Max Supply 21,000,000 BTC)
For example on February 28, 2020 Bitcoin has an outstanding supply of 18,242,337 BTC with a maximum supply of 21 million. by dividing the amount of supply in circulation with Max Supply, you can find out how many coins have been mined or distributed. Bitcoin, for example, means 18,242,337 / 21 million = 0.86868271428 or 87% Means, the number of Bitcoin that has not been mined is 13% and coins that have been circulating will become more valuable as the new Bitcoin inventory decreases.