Crypto investment is quite similar to standard stock investment. Both of them also have a market where you can invest and see various activities of their assets. Therefore, coin market research is crucial to develop the right and profitable investment portfolio. Why is it important?
The Infant Stage of Cryptocurrency Market
The stock market can be considered as a new investment asset. What about the crypto coin market? Many experts see it as the infant stage. Because of these circumstances, proper research on the coin market is necessary before you invest and buy any cryptocurrency.
The infant stage of the crypto market causes various effects, such as high volatility. It is similar to the standard stock market. However, the change mostly happens gradually. Mostly, it is because the market has matured, which provides more data and information you can analyze. Therefore, the change is fast but not as fast as the cryptocurrency market.
The high volatility of the coin market causes the change to happen much faster than the standard stock market. You can even see the big difference in the value of cryptocurrency in a matter of hours. The asset that has a high value one hour before can easily fall and become one of the worst assets to put your money into.
Because of this condition, you need proper market research. You will know, and maybe, can predict the movement of the cryptocurrency. From that point, it will be much easier to decide which crypto asset that you can use.
Even though the crypto market is new and has some kind of tricky unstable condition, we believe that it will be getting better. Along with the time, it will have more data and information you can analyze. Therefore, the volatility also will decrease. And then, you can invest without any problem.
However, currently, market research is vital. Plus, you also have to be aware of the whale trader. They buy a lot and then release the coin into the market to get a fast profit. It can mess up the circulating supply of the coin, and lower a specific cryptocurrency value. When that happens on your crypto asset, get ready to lose money, unless you have prepared beforehand.
How to Analyze
With a lot of similarities to stock markets, you can conduct the same market research as the stock market. Of course, you have to adjust here and there to fit with the asset you aimed for as well as your investment strategy. Here are three methods to analyze the crypto market.
– Technical Analysis
The first method is technical analysis. You will learn more about the trend of crypto trading. Then, use the past activity of the cryptocurrency to determine and predict its value and price. You can use this method to see the short-term and long-term conditions. Match it with your investment style to get the best result.
You also can use various cryptanalysis tools available on the internet. Mostly, you can find them in the crypto exchange portal. Each of them produces a different result and has various purposes. Use them to support your coin market research, to get as much data as you need. Then, use it to decide on your crypto investment.
– Fundamental Analysis
This method will take you to the world behind the coin market. You will learn about the various factors that determine the value and price of the cryptocurrency. The knowledge and information you got from this research will help you to determine the real value of the cryptocurrency you want to invest in. It allows you to avoid the risk of losing more money.
– Sentimental Analysis
In this research, you will see the external factors that affect the coin market situation. As we mentioned before, the concept of the cryptocurrency market is quite similar to the stock market. Therefore, the external factor concept that affects both markets is also applicable to the crypto market.
As for the external factors, you can see them from various perspectives. The big and famous trader is one of them. By following their movement on the market, you can see and predict the change that could happen in the future. Other important figures, like celebrities, journalists, or politicians, also could affect the coin market situation.
However, anal sizing the external factors in this part could be quite challenging for you, especially for a beginner. The standard stock market trades a stock, which is a share of a company. Therefore, you can conduct a sentimental analysis of any factors that are related to the field where that company operates.
The cryptocurrency market is different. It uses a digital currency that has no relation to a company. You can’t use a similar analysis to the standard stock market. Therefore, we recommend you follow the movement of big traders.
All information and data you get from those external factors will become fundamental information that determines where you want to move. Therefore, a trader with proper coin market research will have a better chance to make more profit from this new market.
Why Do We Need Coin Market Research?
As you can see, we have explained three methods to invest in cryptocurrency above. Next, you also need to learn more about the reason why you have to conduct the coin market research. It is easy to answer.
– Preparation – you can create a strategy based on the data you found to form the coin market research.
– Profit – understanding the market condition will help you to make the right decision. You invest in the right product. In the end, you will get more profit than before.
– Self-improvement – as a trader, coin market research is also a chance to improve your skill and knowledge about the crypto exchanges.
Once you understand everything we say above, the next thing you should do is practicing it. Prepare yourself to invest with the proper knowledge and information you get during the coin market research activity.