Anonymity and lack of control by the state (or private structures) are the main reasons for the growing popularity of digital currencies. Not so long ago, most economists and analysts considered them to be a well-designed fraudulent scheme. But today, the participants in the global financial market relate to electronic money, as well as to ordinary national currencies. This was facilitated by:
• The rapid growth of the cost of the first cryptocurrency in the world (VTS), the price of which at the end of 2017 increased to 20 thousand dollars (a year before these events, the cost of Bitcoin did not exceed $ 500) caused these digital money to start to be considered profitable object for investment.
• In many countries of the world, altcoins received the status of legal tender.
• High level of capitalization of the cryptocurrency market.
• Public interest in digital money.
The ability to control the rate of cryptocurrency online and the use of blockchain technology also contributed to the growing popularity of electronic means of payment.
Cryptocurrency market capitalization
One of the key indicators used to analyze the cryptocurrency market is the level of their capitalization. This parameter shows the total value of all cryptomonet in circulation. In order to know the exact value of the parameter in question, the value of one coin should be multiplied by their quantity. For example, the cost of one conventional unit is $ 30, and their total amount is 1000 pieces, which means that the market capitalization of this cryptocurrency is $ 30,000.
It is not difficult to guess that the capitalization of the cryptocurrency market depends on the factors influencing their course and quantity. Given the fact that the formation of the value of digital money, like any other commodity, is influenced by universal economic laws, it means that the price of cryptomonet depends on the level of demand for them. On the other hand, mining (the process of creating digital money) with the advent of each new coin becomes more difficult. And if the rate of fiat money depends on a huge number of different factors (economic situation, export / import, central banks policy, etc.), then the change in the price of cryptocurrencies is more like a rise / fall in the value of securities.
It should be clarified that the capitalization of the cryptocurrency market does not have an exact value. Many e-money owners lose access to their wallets or send coins using incorrect details. But despite this, the approximate value of cryptocurrency market capitalization is the starting point for determining the prospects for their further development.
Cryptocurrency exchange rate
Market capitalization, online cryptocurrency exchange rate, as well as trading volumes and dynamics of changes in the value of digital money make it possible to determine how promising each currency is. Experienced traders recommend analyzing not only against the dollar, but also using other fiat money or cryptocurrency. In addition to the above parameters, to explore theprospects of digital coins of interest, you need to constantly monitor economic news. For example, the adoption of a law on the legalization of some cryptocurrency in countries such as Japan, the United States or China will necessarily affect its value.
The list of the main factors that influence the rate of cryptocurrency are:
• Supply and demand for digital money.
• World economic news related to the cryptomonet market.
• Laws and regulations on the use of electronic currencies.
• Reviews and articles of well-known economists, financiers or analysts who study the considered payment instruments.
• Increase / depreciation of Bitcoin, which directly affects the cost of other altcoins.
• High activity of large participants in the global financial market.
Despite the fact that the cryptocurrency market is developing steadily and new digital currencies are emerging almost every day, many analysts do not recommend using these payment instruments as objects for profitable investments. The profit that you receive as a result of a small change in their value will go to pay commissions in the process of converting military-technical cooperation or other altcoins into cash. As for long-term forecasts, no economist can give an accurate, reasoned answer about the course of digital money in a year or two. Readers who do not know how to save / increase their savings can buy well-known cryptocurrencies (Ethereum or BTC) and spend a small amount on new exotic coins. Such a decision allows you to expect to receive a decent profit if there is a sharp increase in their value. But in this case it is better not to spend more than 15% of the total amount of savings.
Given the fact that capitalization is an excellent indicator that allows you to determine the possibilities of cryptocurrency, always start exploring digital money with this parameter. If we are talking about altcoins with a high level of capitalization, then we should not count on a sharp increase in their value several times. It is also necessary to pay as much attention as possible to the daily fluctuations of the cryptocurrency rate. A detailed analysis of this information allows you to highlight promising digital money that can be a profitable investment item.