Fundamental of cryptocurrencies: essential measures to assess cryptographic assets
The world of cryptocurrency has experienced rapid growth and volatility in recent years, certain assets that have an increase in explosive prices, while others have collapsed. Consequently, investors and analysts must carefully assess the fundamental aspects of an asset of cryptocurrency before investing.
In this article, we will deepen the key measures that fund managers use to assess cryptocurrencies and provide an overview of their importance to determine the value proposal for cryptography.
1. Market capitalization
The market capitalization (market capitalization) is a largely recognized metric which represents the total value of shares or currencies in the circulation of an asset of cryptocurrency. It can be calculated using the formula: CAPE scholarship tree = total supply / 2. This metric provides an indication of the size of the market size and, thereafter, liquidity.
The market capitalization is essential to determine the general value of a cryptography, because it affects its volume of negotiation, its interest in investors and the feeling of the market. For example, if a cryptocurrency has a high market capitalization, it is more likely that investors are interested in buying or selling the assets, which can increase prices.
2. Offer and request
Supply and demand are critical factors that influence the price of cryptocurrencies. The balance between buyers and sellers is crucial to determine whether the price of an asset will increase or decrease.
There are two main types of supply and demand:
* Request motivated by the seller : this happens when investors are impatient to buy a cryptocurrency at its low point, which increases prices.
* Request trained by the buyer : on the contrary, if there are fewer buyers than sellers, prices tend to decrease.
Fund administrators use measures such as the negotiation volume (TVL) of exchanges, capitalization of the capital market and the price / profits ratio (P / E) to measure supply and demand. A high TVL indicates a growing community of investors, while under TVL may indicate a decreasing interest in the assets.
3. Commercial volume
The volume of negotiation is another essential metric which measures the amount of the activity of purchase and sale in an exchange. Provides information on market feeling, liquidity and price stability.
High commercial volume may indicate high demand for cryptocurrency, which can increase prices. On the contrary, a low commercial volume can suggest a lack of interest in assets or greater volatility.
4. Capitalization of the layer versus supply
One fundamental aspect to be considered when assessing cryptocurrencies is their supply and demand relationship (SMDR). This metric measures the difference between the market capitalization of an asset and its total offer.
If the SMDR is high, you can indicate that there are more buyers than sellers, which can cause prices over time.
5. Price ratio (P / E)
The P / E relationship compares the price of actions of a cryptocurrency with its benefits by action. This metric helps investors to understand if an asset is undervalued or overvalued compared to its peers and reference points of the industry.
A higher P / E ratio may indicate that an asset is cited with a bonus, while a lower relationship suggests that it has a fair price.
6. Volatility
Volatility refers to the price fluctuations of a cryptocurrency in a short time. High volatility can be beneficial for investors who are looking for high yields of their investments.
Fund directors use measures such as the standard difference in the daily negotiation volume, or the average time between price changes, to measure the volatility of an asset.
7. Technical indicators
Technical indicators provide information on the underlying trends and models of a cryptocurrency. These can be used with a fundamental analysis to make informed investment decisions.