Analysing Cryptocurrency Investment-Part 4

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Author : Crypto Income Staff 21 November 2017

Put it this way, it’s easier to see greater ROI by investing in an ICO with a lower market cap than in an ICO with a larger ICO. This depends on market sentiment as well. However, if you invest in a cryptocurrency during ICO and it hits the market at say $5 million vs an ICO with a market cap of $100 million, it’s far easier for your $5 million market cap to go 500% to $25 million than it is for your $100 million ICO to go to $500 million. Some investors use Market Cap for bargain hunting. They look for good ICOs or altcoins with a lot of potential value and low market capitalizations. Those characteristics can be a sign of a good cryptocurrency that the market is ignoring or has not yet discovered yet. Note, make sure you read our new Ultimate Guide to Making Millions with ICO’s at cryptoincome.io/ultimate-mega-guide-make-millions-cryptocurrency-icos/ by Ben Krypto, the owner of CryptoIncome.io, and guy who knows what he’s talking about when it comes to making millions with ICO’s.

BEHAVIORAL AND VALUE INVESTING WITH MARKET CAP. Value and behavioural investors pay a lot of attention to Market Cap because it can give an indication of investors’ attitudes toward a particular cryptocurrency. A high market capitalization can indicate investors like an altcoin and are willing to pay more for it and that particular cryptocurrency has a lot of trading on it. A lower cap might reveal a cryptocurrency that investors do not want at any price. Of course, this depends completely on the market sentiment at the time. Such reading of Market Cap can help investors pick up future bargains. A low Market Cap might indicate that investors do not understand the potential value of the technology involved in an ICO for example. A high market capitalization for another ICO might indicate that investors are overestimating the potential of that altcoin or just buying the coin out of FOMO. There are also very irrational factors that inflate Market Caps. The high Market Cap for Bitcoin is partially driven by the fact that it is the only cryptocurrency many people are familiar with. Many people, including a lot of journalists, make the basic mistake of confusing Bitcoin and cryptocurrencies in general.

Some of them assume Bitcoin is the only cryptocurrency in existence, so it is the only one that they invest in. Others avoid altcoins entirely because of the well-publicized problems with Bitcoin. Understanding such behavioural factors can help you make much better use of Market Cap in your analysis. WHY MORE RESEARCH IS ALWAYS BETTER. Market Cap, Total Supply, Circulating, Supply, and Coin Price are only the beginning of what you need to know about a cryptocurrency or ICO. There are many other factors that can affect its price. The other factors can include technology, marketing, investor psychology, economics, politics, regulation, reputation, crime, market hysteria, the news media, forks, rumours, plans, and market sentiment to name just a few. You cannot discover or predict everything but is possible to learn a lot through research. The best advice for an altcoin investor is to do your homework. After you perform the basic analysis do as much research about the ICO cryptocurrency as you. Try to read or listen to everything about the cryptocurrency, even the pieces with conclusions you do not agree with. The more you know about a cryptocurrency the better. It is what you do not know that will cost you money in the market.

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