The crypto market differentiates from the traditional financial markets with its incredibly high level of volatility. While being the most profitable investment option, crypto is also the riskiest field for investment.
How to understand the cryptocurrency market?
Let’s discuss the key components.
The main characteristics of every crypto asset are:
- crypto currency price;
- trade volume;
- market cap.
Market cap crypto explained
Many people think that crypto currency price is the only thing that helps to understand if it is worth investing in an asset, but that is wrong. In fact, market cap is what really matters. It helps to know how the asset competes with other coins in the market.
The indicator of capitalization shows the overall attitude of investors toward an asset. The higher the market cap, the bigger the asset’s dominance and the higher the ranking among competitors. Capitalization depends on price and the number of coins in global circulation and is calculated by multiplying these indicators. Thus, crypto coins with a high price but small circulation can have a high indicator of a cap, the same as coins with a large supply but a lower rate.
Crypto assets are divided into:
- Mega capitalization: Only Bitcoin and Ethereum fall into this category
- Large cap: XRP, Tether, BNB, Cardano, etc
- Middle cap: Litecoin, DAI, Shiba Inu, etc
- Small cap coins
Diversification is a good strategy
Experienced investors recommend diversifying portfolios by buying top cryptos in terms of cap, middle, and small-cap coins. The fact is that small-cap assets are more sensitive to market changes and are easier to skyrocket during the market bull trend.
To buy digital assets, you can use the WhiteBIT trading platform, and if you want to learn more about crypto investments, visit the WhiteBIT blog — an educational and news resource with reviews on crypto assets and trading strategies.
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