When the crypto market is down, most investors are tempted to sell their coins and withdraw their investments. However, you should wait until the market has bottomed out before you do so. There are some metrics that can help you determine whether this is the right time to invest or not. Here are five metrics you need to monitor before investing in crypto during a bear market:
1. Market Cap
Market cap (or “market capitalization”) measures how much money has been invested in a particular currency or asset. It is calculated by multiplying the total number of coins by their price per unit.
2. Trading Volume
Trading volume refers to how much activity has taken place over a given period — typically 24 hours or one week. This is measured in transactions and expressed as an average number of coins sold per minute or hour (i.e., volume over time).
3. Price Volatility
Volatility measures how much a coin’s price changes within a specific period. This metric helps investors determine whether an asset is overvalued or undervalued based on its volatility relative to other assets such as gold or USD/EUR/GBP etc., which have low volatility compared to cryptocurrencies.
4. Hash Rate
Hash rate measures how fast your miner can solve hashes per second (H/s). The higher the hash rate, the faster your miner can mine coins. A low hash rate means that it will take longer for you to generate enough coins for profit or even a break-even point (if there is one).
5. Network Activity
Network activity indicates how many people use the crypto network and whether it is growing or shrinking. More money is injected into the ecosystem if more transactions occur and more people become interested in investing in crypto. This growth can lead to increased adoption and price increases for those holding their coins for long enough.
When investing in a new cryptocurrency, use these 5 metrics to analyze the situation, and you should have a better idea of how viable your investment is. The most important metric will always be a market cap, but, with that aside, consider the others to make sure your crypto pick has a future worth investing in.
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