Using Coinmarketcap To Analyse Cryptocurrency 0/0
Lesson 1: Understanding Coinmarketcap
Using Coinmarketcap To Analyse Cryptocurrency.
Coinmarketcap.com is one of the most valuable tool traders can use to do research on any Cryptocurrency. Any cryptocurrency that hasn’t find it way to coinmarketcap is not yet considered a coin of value.
Let’s visit coinmarketcap.com to see what we can dish out of it…
What is “Market Capitalization” and how is it calculated?
Market Capitalization is one way to rank the relative size of a cryptocurrency. It’s calculated by multiplying the Price by the Circulating Supply.
Market Cap = Price X Circulating Supply.
How are the prices calculated for various the cryptocurrencies?
Price is calculated by taking the volume weighted average of all prices reported at each market. Sources for the prices can be found on the markets section on each cryptocurrency page. For example, Bitcoin’s markets.
What is the difference between “Circulating Supply”, “Total Supply”, and “Max Supply”?
Circulating Supply is the best approximation of the number of coins that are circulating in the market and in the general public’s hands.
Total Supply is the total amount of coins in existence right now (minus any coins that have been verifiably burned).
Max Supply the best approximation of the maximum amount of coins that will ever exist in the lifetime of the cryptocurrency.
Why is the Circulating Supply used in determining the market capitalization instead of Total Supply?
We’ve found that Circulating Supply is a much better metric for determining the market capitalization. Coins that are locked, reserved, or not able to be sold on the public market are coins that can’t affect the price and thus should not be allowed to affect the market capitalization as well. The method of using the Circulating Supply is analogous to the method of using public float for determining the market capitalization of companies in traditional investing.
What is the difference between a “Coin” and a “Token” on the site?
A Coin is a cryptocurrency that can operate independently.
A Token is a cryptocurrency that depends on another cryptocurrency as a platform to operate. Check out the crypto tokens listings to view a list of tokens and their respective platforms.
What are the criteria for a cryptocurrency to be listed on CoinMarketCap?
The criteria for a cryptocurrency to be listed is the following:
– Must be a cryptocurrency or a crypto token.
– Must be on a public exchange with an API that reports the last traded price and the last 24 hour trading volume.
– Must have a non-zero trading volume on at least one supported exchange so a price can be determined.
– For market cap ranking, an accurate circulating supply figure is required.
If you’d like to have a cryptocurrency listed and it meets all of the criteria, please fill out the request form.
Why are markets with no fees excluded from the price average and total trading volume?
When no fees are being charged at the exchange, it is possible for a trader (or bot) to trade back and forth with themselves and generate a lot of “fake” volume without penalty. It’s impossible to determine how much of the volume is fake so we exclude it entirely from the calculations.
How do I purchase cryptocurrency?
CoinMarketCap reports on the trading activities of thousands of markets but does not directly sell any cryptocurrency. The best way to find where to buy is by looking on the markets section for the cryptocurrency. For example, to find where to buy Bitcoin, you can look at the markets section for Bitcoin.
In what time zone is the site based?
Data is collected, recorded, and reported in UTC time unless otherwise specified.
Why does the supply number sometimes appear grayed out?
A grayed out supply number indicates that the data source for the supply has gone stale for at least seven days and might not be up to date.
From the diagram above we can see that the marketcap of Bitcoin is $61,190,440,732 or 16,585,562BTC.The more the capitalization of a coin the more Liquid it is.
Recommendation: Trade coins that have a capitalization of 1million dollars and above
Any coin that has a market cap that is below $500 thousand may not be liquid enough. Do not trade it except the coin is way too undervalued and you think that if you invest in that coin it will rise in value in the nearest future.
The total volume traded within 24hr= $763,397,000 or 207,022BTC
Always trade a coin with trading volume that goes above the $1million mark every 24hr.It guarantees high liquidity.
Never you trade a coin with very low 24hrs trading volume.You could get stuck in the trade with nobody wanting to buy.
The Circulating supply of BTC=16,585,562BTC While the Maximum supply=21,000,000BTC.
Watch out for the maximum supply of the coin. If they are below 100million that’s also A good One. Coins with low maximum supply tend to rise in value faster than other that have very high maximum supply
Any coin whose circulating supply is far greater than $1billion will find it difficult to cross the $1 dollar price. Except the ones that has exceptional innovation.
The market tells you the number of exchanges that have listed that coin for traders to trade on their exchange. This listing is done through voting process by the cryptocurrency community who are interested in that coin. If the coin gets a good number of votes against other coins that were selected to be listed, it is then listed on the exchange.
A coin that has it presence in several exchanges shows the level of acceptability and trust on that coin.
Whenever a coin is a announced to be listed in any of the lagest trading exchanges (E.g: Bittrex and Poloniex, Bitfinex, Okcoin , Gdax , Binance,Huobi,Hitbtc etc.) There is always rise in volume. TRADE IT!
Do not trade a coin that is not listed on Two to three major exchanges. High liquidity may not be guaranteed
These show us the social activity of the coin. In terms of it marketing activities, its interaction with their community and its development updates. Always check out their twitter handle or
even follow them on twitter ad reddit to get their recent updates on their process with respect to their project.
Trade coins that has full presence on social media and reddit.Twitter shows you their progress and marketing activities while reddit shows you the community perception about the coin
Never you trade a coin that has no Active social media presence ( they must be present on one of these, telegram, Twitter, facebook, Reddit or Slack). That shows that the project is dyeing or is dead.
This show a detailed history of the price(days opening and closing prices,24hrs low and highs), volume traded in 24hrs and the market cap of the coin.
Always use the history section to backtrack the performermce of a coin.
Do not trade any coin without a concise attractive historical data.
These shows us the graphical representation of the performance of a coin.
Use the chart session to get the general trends of the coin. Continues upward movement show a good buying(bullish) signal. All good coins must also respect support and resistance levels.i.e graph of the coin must be moving in a wavy form.
Do not trade a coin whose graph is flat(except you want to accumulate at that zone while hoping that one day the project will pickup) or which shows a continues downward movement.