Evaluating Crypto Before Purchasing

Crypto is one of the most popular assets in the world. Over the past few years, digital money has risen to prominence like no other before it and is currently one of the most discussed in the whole world. While naysayers claim that trusting crypto is a mistake, since its fluctuating prices mean that it can never result in significant revenue for any trader, the number of individuals willing to give cyber money a try has only ever been increasing.

As such, it seems like cryptocurrency’s influence on the financial market isn’t about to let up anytime soon and is even estimated to advance in the future. Hearing the news about the ever-growing influence of digital money, you wouldn’t be alone in wanting to become a trader and give crypto a chance. After all, there’s something to be said about anything that becomes incredibly popular: there’s bound to be something about them that draws everyone in.

Here are some tips you should remember when deciding on the crypto you want to add to your investment portfolio.

Do your research 

Crypto’s popularity means there’s increasing demand. Traders are increasingly looking for newer digital coins they can invest in. As such, there are currently thousands of crypto available. However, not all of them are created equal.

The truth is that there are plenty of scams out there. Cyber thieves can convince you to invest in a specific currency, promising massive returns, but they ultimately run off with your money. The problem with this type of fraudulent scheme happening in the digital world is that it’s virtually impossible to trace them back to anyone, so once your money is lost, it typically remains lost forever.

Scammers are getting increasingly more creative, luring unsuspecting traders in with false promises, and many don’t figure out that something is wrong until it’s too late. As such, the best policy is to do ample research before you settle on crypto, mainly if it’s a newcomer to the market.

Check the official website and look for anything that seems out of the ordinary. Is the website up-to-date and easy to use? Does it contain any spelling errors? Are their objectives clear, and are the team members and partnerships fully and transparently disclosed? If the answers to these questions are unfavorable, you should steer clear of that particular crypto and look for a different alternative.

Market metrics 

If you’re thinking of how to buy cryptocurrency, you should be aware that checking market capitalization is one of the most crucial factors. These figures determine whether or not you should give a certain crypto your time of the day or if you should keep searching.

Market capitalization is calculated by multiplying the current price by the number of coins and tokens in circulation. Typically, the safest bet is to invest in crypto with a high market cap, ideally over $1 billion.

Those in the mid-range also have potential, so if you’re comfortable with a slightly higher degree of risk, you might want to look into them. However, doing this is not advisable if you’re taking your first steps into the crypto ecosystem and have minimal experience.

And, of course, coins with low market capitalization scores are the riskiest of the bunch. Generally speaking, you should stay away from this category to be on the safe side of things.

As a general rule, the currencies ranking in the top 100 are safer than the ones lower on the list. However, it’s not an utterly failsafe method, so you don’t want to base your whole strategy on market value numbers.

Trading volume 

A coin‘s trading volume is a critical indicator to watch out for. The volume shows how much of a currency has been traded within a particular time. Higher volume means higher engagement rates from investors and traders, which is a clear indicator of crypto doing well. The heightened volume also leads to overall improved liquidity and stability.

For instance, the daily trading volume of Bitcoin is roughly $67 billion. The trading volume of the second largest crypto, the altcoin Ethereum, stands at about $20 billion. In contrast, lower volumes signal low investor faith and are generally associated with more significant and dramatic price swings and poor liquidity levels.


Most cryptos have a predetermined max supply, which stands for the maximum number of coins that’ll ever exist. Some haven’t imposed this barrier on themselves, but this is generally a rarity. This measure was undertaken in order to ensure crypto won’t deal with devaluation, as scarcity helps derive value. If an asset is ever-present, its value drops, whereas one that exists in limited amounts records increased values of what people are prepared to pay for it.

The circulating supply indicates the cumulative value of how many coins are currently traded and how many are held in wallets. When you use these metrics and gain a better understanding of a particular coin’s scarcity, you can predict price variations more accurately and estimate how values will differ.

When you know the difference between maximum, total and circulating supply, you can incorporate the knowledge into your trading strategy and make sound buying and selling decisions that help you see the highest amount of returns and much-diminished losses.

Price history 

Taking into account the price history of the cryptocurrency you want to trade in can provide you with valuable insights into how the markets shift. The crypto world is famed for its volatility, so you’ll undoubtedly see many variations when you sit down to run a thorough assessment, but there are still bound to be some patterns you can follow.

The best plan of action is to start your analysis over a shorter period, say six months, then gradually build up to twelve, then thirty-six, then bit by bit, reach “all-time” history. You want to get an understanding that’s as broad as possible so you’re able to approximate both short- and long-term price fluctuations.

Since crypto has become increasingly popular, you might be entertaining the thought of trying it out yourself. However, you must make sure you don’t fall into the trap of going in blind and without doing any research prior.