The cryptocurrency market is highly volatile and may be more speculative than traditional markets. This volatility, coupled with a lack of regulatory oversight and protections for investors, can make it challenging for new investors to enter the space. However, by following a few simple guidelines, you can incorporate crypto into a well-diversified portfolio.
When investing in crypto, focus on fundamentals that matter more than a price chart. This includes assessing real-world adoption, reviewing technical specifications, studying the founders and developers, scanning community engagement, and evaluating competitors. Favor projects that offer unique capabilities that can’t be copied easily and have the potential to disrupt existing markets.
A cryptocurrency’s price is often based on supply and demand, with the most popular currencies typically being the most valuable. They’re also ranked by their market capitalization, or simply called “market cap.”
This number is a rough estimate of the total amount of a cryptocurrency that exists. It’s usually shown alongside the currency name, along with the price and volume in both USD and EUR. Market cap is a useful statistic to track, but keep in mind that it can fluctuate quickly.
Cryptocurrency prices can be influenced by macro trends, investor sentiment, news and social media. For example, favorable regulatory changes can boost investor confidence and drive prices up, while unfavorable regulatory changes or security breaches can lead to market instability and price declines. Additionally, technological advancements can impact prices by improving blockchain technology scalability and security.