How to assess the returns from investments in cryptocurrency
The world of cryptocurrency has exploded in the past ten years, and new coins and tokens are started every day. While many investors have launched high hopes and expectations of returns, reality is often much more complex. With such a high uncertainty and variability, which is associated with the investment in cryptocurrency, the separation of the signal of noise may be difficult.
In this article we will examine how to evaluate the returns from investments in cryptocurrency and offer a comprehensive guide that helps you to move on the market.
Understanding the investment of cryptocurrencies
Before we deal with the evaluation techniques, we first understand in which the cryptocurrency is invested. Cryptocurrencies are digital or virtual currencies that use cryptography for security and decentralized control. They work independently of central banks and governments so that users can send, receive, receive and act without the need for intermediaries.
The investment in cryptocurrencies can be carried out via various platforms, including stock exchanges, brokerage accounts and individual portfolio applications. Each platform has its own rules, fees and requirements for purchase, sale and maintenance of cryptocurrencies.
Assessment of the investment return: step by step instructions
To evaluate the returns from the investment in cryptocurrency, follow the following steps:
- Define your investment goals : Before you invest in cryptocurrency, the investment goals must be defined. Are you looking for short -term profits or long -term growth? Would you like to diversify your portfolio or concentrate on a certain investment class?
- Examine the cryptocurrency : Examine the cryptocurrency in which you are interested in investments. Take a look at his:
* Blockchain technology : Understand how it works and the basic infrastructure.
* A team of programmers and advisors : Check whether a team of programmers learn about its goals, is credible and transparent.
* Market capitalization : Compare the capitalization of the market of various cryptocurrencies to understand the market scale.
- Some popular technical indicators are:
* Movable agent : average prices in a certain period of time (e.g. 50 days, 200 days).
* Relative Force Indicator (RSI) : Measures the speed and change of the price movements.
* Bollinger -Syndrome : It contains two standard and moving medium deviations.
- Analyze market moods : Market moods can indicate the trust of the investor in the value of the cryptocurrency. Analyze:
* Trendline : diagram lines with potential purchase or sales signals.
* Horizer of support and resistance : You identify areas in which prices tend to reflect or break.
- Rate the number of liquidity and trade : Liquidity measures the purchase and sale of currencies, and the trading volume shows the market activity. To search:
* High liquidity : Low standard deviation and high commercial volumes can indicate higher stability.
* Increase in growth of the rotary volume : An increased trading volume can signal the growing interest in cryptocurrency.
- Interest risk : The investment in cryptocurrency has a considerable risk. Incitional risk tolerance through evaluation:
* Variability : understand to lose or win every trade.
* Factors of fear and greed : Note emotional prejudices that can cause investment decisions.
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* Networkffect : Rate the cryptocurrency value based on its network size and user growth.
