What Are The Most Important Crypto Metrics To Follow?
Adoption in the early days of cryptocurrency was considered tough because many found the sector difficult to understand and follow. However, gaining insight into crypto has become easier over time as cryptocurrencies have become more popular, with more enthusiasts taking the time to understand the industry.
Today’s application of digital assets has expanded from the peer-to-peer cash system envisioned by Bitcoin creator Satoshi Nakamoto. There are now various use cases for cryptocurrencies, expanding across several sectors and industries, including finance and health care. Also, a wide range of digital assets are now used for entertainment, specifically with online casinos as crypto is one of the fastest options on the market for withdrawing winnings. Bettors use Bitcoin (BTC), Ether (ETH), USDT, Dogecoin (DOGE), XRP, Cardano (ADA), and several other digital assets at some of the best crypto casinos online. There are even sites dedicated to gambling with specific tokens, like a Solana casino or Doge casino. In addition to gambling, there are efforts to popularize blockchain voting, using cryptocurrencies to conduct transparent elections.
Regardless of individual application of digital assets, traders who understand some of the following basic crypto metrics are likely to fare better in the industry.
Market Capitalization
Market capitalization is one of the most critical metrics to understand as it helps investors determine an asset’s market size, health, and adoption level. It is calculated by multiplying an asset’s total circulating supply by its unit price. In addition to simply getting a sense of the asset’s market size, market capitalization can help understand whether or not an asset is undervalued. Cryptocurrencies with high market capitalizations usually have higher liquidity and are easier to buy and sell, making them more popular to use when making online transactions at a crypto gambling site, online store, or anywhere else.
When liquidity is high, large buy or sell orders do not significantly affect pricing. This keeps the asset stable and somewhat immune to negative market sentiments.
Historical Data
This metric refers to past asset data, including prices, price patterns, market cap, and other trends. A digital asset’s historical data sometimes helps analysts predict price movements, which could assist traders with profitable market moves. For instance, Bitcoin’s historical data, especially around previous halvings, suggest that the king coin will likely spike after the recent halving event. Traders with this knowledge may then buy and hold Bitcoin until a rally happens. However, investors must understand that historical price data does not guarantee price action.
Hash Rate
Hashrate measures the difficulty or combined computational power required to mine new tokens or process transactions. This metric primarily applies to Proof of Work (PoW) blockchains since they require miners to complete mathematical puzzles to add blocks. Hashrate is measured in hashes per second (h/s), essentially the number of hashing attempts miners make every second to solve the puzzles.
A hash rate is important because it reflects network security. A high hash rate means the blockchain requires more computational power for network nodes to achieve consensus. The increased difficulty suggests the network is secure and can withstand threats like the 51% attack. This attack attempt requires one entity to control at least 51% of a network’s total hash rate, allowing them to manipulate the blockchain. The higher a network’s hash rate, the less likely it is for a single entity to control 51%.
Price Fluctuations (1 hour, 24 hours, 7 days, 30 days…)
Cryptocurrencies are notorious for their volatility. Apart from stablecoins pegged to the price of another asset, the average cryptocurrency’s price swings continuously, which makes understanding this metric important. Sometimes, traders use price changes and fluctuations to understand an asset’s stability and performance. When prices are reasonably stable over a 7-day or 30-day period, traders can conclude that the market will retain value for a while. However, a sharp rise or fall over an hour or 24 hours may suggest extreme volatility, which is attractive for traders looking for quick gains. Unfortunately, this presents a higher risk of loss.
Open Interest
This is the total number of options, futures, swaps, and all other unsettled contracts for a token at any time. This metric shows the amount of money flowing into the crypto market through derivatives and measures trading activity as well as market liquidity. Furthermore, traders can use open interest to determine price trends. The market is usually bullish when open interest rises along with prices, and bearish when open interest rises when prices drop.
Conclusion
Traders learning about digital assets must pay attention to many of these metrics to properly understand the crypto market and make profitable moves. Although the number of metrics to learn may be daunting for the average newbie, each indicates unique information and may provide a deeper understanding of the market when combined. A thorough understanding of price action, market capitalization, crypto mining, open interest, and several other metrics helps traders stay informed, presents the best chance of profit, and also helps people adapt to the ever-changing cryptocurrency market.
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