The long-standing crypto winter has harmed the crypto market. Many crypto coins have lost more than half of their value, but crypto enthusiasts remain steady with their support for their favorite coins. Warren Buffett has advised investors to be “fearful when others are greedy, and greedy when others are fearful.” The advice crypto enthusiasts have taken from this piece of wisdom is that they should invest in the remaining months of 2022. Hopefully, their investments will pay off in the long term.
There are several things to consider. The first thing is the market cap of crypto coins. One of the most acceptable methods to invest in crypto is to rank currencies according to market capitalization. In the crypto world, Bitcoin, Ethereum, and Tether are the blue chips of the crypto market. You may choose one or two of these three cryptocurrencies to diversify your cryptocurrency portfolio.
Also, consider whether there will be a limited amount of coins in circulation. Consider the next mining activity for your coin of choice as well. The demand for bitcoin is growing daily, with more people flocking to it. However, its quantity is fixed at 21 million BTC. The increased demand and restricted supply result in a higher digital asset price. Third, each cryptocurrency has a whitepaper that explains the coin’s details in detail. If you believe the currency is viable, you may invest. Finally, consider how valuable the coin’s applications will be in today’s world.
The beauty of crypto coins is that they are fluid, unpredictable, and more like stocks, influenced by technical and fundamental factors. The methods include: Technical Analysis This process is an age-old tactic where crypto or index price predictions are based purely on the asset’s candlestick arrangement and technical indicators. Cryptocurrency price action may be chaotic, but they ultimately move in patterns. Chartists use these structures to determine whether to enter or exit a trade.
The fragmented nature of crypto coins presents an opportunity for arbitrage traders. Arbitrage trading allows one to take advantage of price/valuation/FX differences between two or more cryptocurrency exchanges. To increase the chances of making profits, investors need to practice buying and selling should be simultaneous and instantaneous while being mindful of variables such as fees, the Forex market, and liquidity.
Undoubtedly, price is the guiding beacon from which cryptocurrency traders find their bearing, living, and dying by it every day. Let’s see where technical analysis and crypto charts are made applicable. Cryptocurrency holders cannot access financial statements where they can see vital ledger data because of blockchains’ public and transparent nature. This gem is called on-chain data.
A market trader can use amounts from one exchange to an external wallet to gauge sentiment. The conversion of assets, say from BTC to USD or fiat, and vice versa for trade momentum, the growth of address for adoption rate, actual demand, and so much more. Ultimately, on-chain data can be one main dish in the whole buffet of on-chain data that a crypto trader should use when evaluating a digital asset in the open market.