In simple terms, market capitalization is the value of a cryptocurrency on the market at any given time. To calculate it, you simply need to multiply the amount of digital coins in circulation by the price of each cryptocurrency.
Let's take an example. You are the owner of an apple orchard and you harvested 100 apples, which are sold for one euro each. Since the apples that are still in the trees do not circulate, we will not consider them. The market capitalization of your apples would be 100 euros.
Why is it important to consider market capitalization before investing in cryptocurrencies?
Because knowing the market capitalization of a cryptocurrency can give you an idea of the probability that the price of a token will skyrocket.
The key is not only to find a token with a low price, but also one with little circulation. In other words, you should find a low market cap cryptocurrency.
Before deciding what is the next cheapest cryptocurrency to invest in in 2021, let's look at the two main types of investment strategies for cryptocurrencies.
A long-term investment is one in which you expect a cryptocurrency to perform better over a longer period of time.
Normally, the minimum time for long-term investment is 6 months to 1 year. It will depend on you how you decide to invest, you can make an investment in one go or you can invest at different times.
Long-term investment strategy:
Again, before investing any amount, you should have a clear idea of what your investment goals are:
Will you sell the cryptocurrency after a certain time or will you sell it when it reaches a certain price?
Will you sell your investment at once or will you sell parts of it at different times?
On what occasion would you sell the long-term investment in the short term? For example, if new laws come into effect that could affect the long-term price of your investment, you may want to consider selling it earlier.
Next, you need to do some research to decide which cryptocurrencies are the best as long-term investments. We recommend that you check the following:
Is your technology better than your competitors?
Do you have a strong team of founders and developers?
How good is your roadmap / plan?
Are you solving real-world problems?
If you truly believe in the cryptocurrency you invest in, you should learn to keep your investment even when prices drop. If you sell "when you panic", then you could lose money and regret selling.
Reasons for long-term investments:
Long-term investment makes your life easier, as you don't need to be aware of the market all the time.
You think some cryptocurrencies will give better performance in the long run.
You really believe in the future of cryptocurrency.
Short-term investments are made in shorter periods of time in the hope of making quick profits. So how short is a short-term investment?
It can take seconds, minutes, days or even a few months.
How do short-term investments work?
As with long-term investments, you should have clear objectives for your investment. You need to ask yourself:
What benefit do you expect from this investment? This will give you an idea of the price at which you should buy / sell the cryptocurrency.
How much loss will you take? This will help you control your losses if the price of the cryptocurrency drops suddenly.
Do you have time to study and follow the cryptocurrency market and news?
Can you do technical analysis of the cryptocurrency market? If not, you should learn before investing.
Will your short-term strategy give you greater benefits than a long-term strategy?
Cryptocurrencies that meet the following characteristics are good options for short-term investments:
Low market capitalization.
High trading volume: many people buy and sell it every minute.
They are currently trending in the news and social networks.
Have an ICO or just finished your ICO: try to get them at a low price.
The main advantage of short-term investments is that you can make a lot of money in a short time. However, they have their disadvantages.
They require a lot of time and effort as it is necessary to constantly monitor market prices.
It is a riskier investment and can result in higher losses due to how much the price changes in a short time.
It can be very stressful.
Finding:
While cryptocurrencies can bring you huge profits, you need to be prepared for one more thing: losing money. Remember, your predictions won't always be correct! No one really knows what will happen to the price of a cryptocurrency or any other investment.
Do you know what most expert cryptocurrency investors say? You should only invest money that you are not afraid to lose. That's great advice, so always remember it!
Finally, if you want to start trading cryptocurrencies, make sure to use only the most reliable Exchanges, such as Binance.
Alejandro O. Asharabed Trucido
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