- Points to look at while one evaluates cryptos for investment
- The new Trump appointed Attorney General seems to have an interest in Bitcoin
What to consider before you make your cryptocurrency investment
It’s time that everyone realizes and understand that crypto assets have value. But what most people fail to answer is what value should each specific coin have. Although the best answer to this question is “whatever someone is willing to pay for it”, but it doesn’t exactly work that way, at least what the markets have shown us in the past. When one asks this question in relation to traditional investment assets such as bonds or equities, they may find hundreds of years of analytical methods to determine value, something which is missing and is yet to emerge in this nascent crypto industry. Hence one has to look at the factors that are available and have an impact on the crypto prises.
People invest in bitcoin as it is volatile and that creates an opportunity to make money if one gets it right. It also provides a hedge against systematic risk, which has its effect on every other crypto asset that is present in the markets. The factors that one has to evaluate before they make an investment are
- Market cap– This is by far the most commonly used metric by crypto enthusiasts before they make an investment. Market Capitalization is the product of Price per coin and Coins in circulation. Although this falls flat when there is hardfork like Bitcoin and Bitcoin Cash- but these are on of days and events.
- Mining cost analysis– This is a factor which is native to the cryptocurrency industry and has a direct impact on the prices of cryptocurrencies.