Cryptocurrency | How to analyze Cryptocurrency from Market cap, Transaction Volume, and Supply Circulation


Analyzing is sometimes quite difficult for some people, especially new investors in the cryptocurrency world. However, most investors usually use data or factors from market cap, supply volume, and circulating supply to determine their investment strategy and which coins will be invested.

In my opinion, determining the investment strategy by analyzing some of the factors above is a good step, because in my opinion this analysis is to the point and I also use it for my strategy.


!!!!! Keep in mind this article is only a reference. If you are interested in using it, then read this article carefully.

Market Cap
Market Cap is the total value of all coins in circulation and one of the metrics to determine the final price of a coin. The formula for calculating Market Cap is | last price X supply circulation. For example when the price of ETH $ 10 multiplied by the total supply in circulation is $ 10,000,000 coins, then the result is USD 10,000,000 Million. However, P2P trading is not considered.

Cryptocurrency data provider sites, such as coingecko and coinmarcetcap, determine the price of each coin from trading activities on various crypto exchanges. However, this method is also susceptible to "manipulation" wash trading to raise certain coin prices.

Transaction Volume
Volume is the number of active traders on a particular coin. For example, if the trading volume is ETH $ 20 million and the price is $20, it means that there are 1000,000 ETH active in the trade. the more trading volume the easier it is to buy and sell.

Because volume shows people's interest in a particular coin, transaction volume is a good metric for determining whether a coin is good or not to be bought and is liquid or not. If a coin has good volume and good liquidity, then the coin is good for investment.

But the Wash Trading scheme can also create fake volumes and are very difficult to distinguish. Therefore, I suggest that I look first at the sources of popularity and community activities and the history of the coin volume.


Circulating supply & total
Divided into two, namely total supply and supply circulation. The total supply is the total coin overall, while the circulating supply is the coin available in the market.

circulating supply & total can determine the price of a coin. for example, the reward block from Bitcoin mining activities will be reduced at a certain period, which means that if the block reward is reduced the bitcoin that enters the market will also be reduced and will cause a spike in price increases.

In addition to non-minable Altcoins such as the ERC-20 Token, it will usually burn or destroy reserve tokens to avoid lowering prices and to increase the demand for coins. This is a good metric for determining the potential of a cryptocurrency.

Bonus, Factor X
In addition to analyzing the three factors above, you also have to analyze external factors such as news and community activities. because if the coin is preached bad then the price of the coin will also go down and if the community activity is lonely or the coin gets a light lamp from certain intuition can also cause a price fall.

For example, Bitcoin is banned in China and the South Korean Government makes strict rules about crypto causing the price of Bitcoin to drop dramatically.

Note: Any crypto trading activity is at risk because it is very volatile and make this article a reference source. Every activity is your responsibility.

Source: Coinbeat


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Cryptocurrency | How to analyze Cryptocurrency from Market cap, Transaction Volume, and Supply Circulation Cryptocurrency | How to analyze Cryptocurrency from Market cap, Transaction Volume, and Supply Circulation Reviewed by sheffter on December 12, 2019 Rating: 5

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