This can be a tricky question, especially if you are a beginner and just starting to trade digital currencies. We all know about bitcoin, but considering its price reached $10,000, we think this is too much for average users. In this case, you need to find something that will be profitable in the next couple of years. But, how will you do that, if you aren’t a financial expert and you don’t have a sense for trading? Now you have a variety of choice and dozens of digital currencies available on the market. We are going to show you how to make the best decision.
This time gap indicates how much value has been traded through a 24h period and it is expressed in USC and BTC. The higher the volume, the more established the base is. In this case, you should choose a coin that has at least $10,000 trading volume. This is a proof that digital currency is already traded and that there is a certain percentage of people who believe in this cryptocurrency. You can find online some successful stories of investors buying coins for a couple of cents, with a low volume and reached success, but these cases are rare.
You need to pay attention to pump and dump schemes. They are usually set by developers who but a large number of coins and later they sell it. This also means that price will decrease as well. But, if you look at the trading history, you can easily spot this pattern.
The coin liquidity is measured in volume and BTC. Some coins have a minimal BTC volume, which means, if you buy a couple of hundred of them, it can move a market in your disadvantage. To avoid this situation, you shouldn’t use exchanges that a low volume of exchanges.
On the other hand, the exchange can artificially increase the trading volume to attract more investors, who always look for higher liquidity. So, if you aren’t familiar with the exchange history, or you have chosen not such a prominent exchange, then you should pay attention to increase of volume and see if it matches the increase in price. But, why are exchanges doing this? It’s simple; they don’t want to lose clients and corresponding fees. Unfortunately, this problem also affects even larger exchanges, so you should pay attention.
If you want to determine the market capitalization, you just have to multiply the number of coins and current market price. However, this only works with the coins that have already been mined. Developers tend to make a lot of coins at the beginning, which can reflect the higher price, than the one in reality.
The current price of the coin is a perceived value, and you should never make a decision based on that amount. So, if you see a digital currency with a low daily volume, but has a high market capitalization, then it’s some form of manipulation, and you should stay away from it.