Analysis of Cryptocurrencies

How to Analyze the Investment Potential of Cryptocurrencies?

Analyzing and understanding the potential price and value of a cryptocurrency can be both difficult and frustrating. There is no quick analysis method that can predict the price of an altcoin, but there are some parameters that can help you understand where the money is going and how to measure whether it is a good potential investment.

Understanding these factors well can help you understand some of the things that are going on in the market. No one can know everything that happens in the market, but understanding these concepts will allow you to know a few things. A little understanding of the market is always better than not knowing at all.

The cryptocurrency analysis concepts that every altcoin investor should be familiar with are Total Supply, Circulating Supply, Coin Price, Market Cap, and Coin Price. Researching them will tell you better, always more clearly, what is happening in the market.

Why do you need to know the total supply of a cryptocurrency?

The Total Supply of a cryptocurrency (also known as its total market cap) gives the circulating and future altcoin values ​​of that current currency.

This includes the coins or circulating supply in the market and any currency held by speculators, investors, and people participating in the initial cryptocurrency offering (ICO).

Total Supply is important because its size can determine the Money Price. A popular rule is that the larger the supply, the lower the price. Note: this is not always true because external factors; Investor sentiment and legal restrictions can affect the Coin Price.

Three factors that can shape aggregate supply are Founders' (Issuers) Holdings, Coin Rate (also known as coin inflation), and Company Lock-in. Some cryptocurrencies also exit the circulating supply for rewards and promotions. It is important to know what these terms mean because they can provide more data for analysis.

The money held by issuers refers to the cryptocurrency the team behind an ICO holds for them. These coins can be sold for years or kept personally by the founders. You can find out the number of coins of the founder by carefully reading the ICO website; The amount of money set aside for the founders is usually listed there or in the ICO white paper. Many cryptocurrencies are allocated between 5% and 30% with 10% to 15% of the normal figures, although there are some coins where the founders own most of the supply. In general, founders are more welcome to hold money at a smaller percentage. A good ICO is expected to use some smart contracts to keep the money the founders hold locked for 1-4 years and prevent the founders from issuing their money to the market. This measure protects investors and the value of the coin.

Mining Rate is the rate at which new altcoins are created from the blockchain. It can affect supply because faster mining means more cryptocurrencies on the market, which can lead to a lower price. Determining the total Mining Rate for a cryptocurrency can be difficult because different miners have different speeds. This rate can be estimated by monitoring the rate of change in circulating supply.

Company Lockdown: The number of altcoins that are deliberately kept out of the market by the organization behind the ICO. Unlike Founders Coins, this cryptocurrency is held by the company, not the individual. Like founding coins, the end of Company Lockdown can abruptly change the Total and Circulating amount of coins, leaving a large amount of coins on the market. What the amount in the Company Lockdown will be is usually located somewhere on the ICO's website.

Total Supply: Not to be confused with Maximum Supply. Some cryptocurrencies, such as Bitcoin, are designed with a limit on the number of coins that can be mined. When Maximum Supply is reached, there will be no new Bitcoins. Other altcoins like Ethereum do not have a Maximum Supply, so their Total Supply can continue to grow indefinitely.

Circulating Supply

Circulating Supply is the number of altcoins currently sold in the market. This number can be easily determined on websites like which lists the Roaming Source.

Tracking the circulating supply is the best way to predict the demand for a cryptocurrency. This is best done by looking at the Rate of Change ratio posted on some websites.

The circulating supply directly affects the price of the cryptocurrency. 'Lower' circulating supply, higher price (based on market cap with a lower market cap and a lower market cap). The circulating supply is the value often used to calculate the price of the cryptocurrency.

This means that a cryptocurrency with a lower circulating supply (for example 10 million coins) will have a much higher price per coin with a higher circulating supply.

For example, with billions of coins in supply and billions in market cap, Ripple has a coin price of around 0.25 to 0.40 cents. With a circulating supply of over $1 million, Zcash has a coin price of hundreds of dollars.

Ripple will never have a $10, $50 or $100 coin due to its large coin supply. Small circulating offerings result in higher prices per coin, assuming the same market value.

Another consideration here is that a coin with a small circulating supply will increase in price much faster than a cryptocurrency with a large circulating supply.

For example, it is much easier (and faster) for a coin like Monaco with a circulating supply of 10 million to reach $25 per coin for a coin like TenX with a circulating supply of 100 million. Price increase tends to be faster.

Usually, changes in the Circulating Supply precede the price change. Generally, a larger Circulating Supply indicates a lower price and a smaller Circulating Supply leads to a higher price. A change in the circulating supply occurs when new coins are issued or some of the locked coins (founder coins, company coins, etc.) are released into circulation.

The Importance of Coin Price

Coin Price is the amount that one unit of a given cryptocurrency is currently selling in the market. This is the number that news stories about a particular altcoin will usually focus on because it's easy to understand. A Bitcoin cap of around $10,000 mentions the cryptocurrency Coin Price.

Coin Price is determined by a combination of Market Demand and Circulating Supply.

Circulation Supply

Circulating Supply is the total amount of coins currently in circulation. This does not include coins that have not yet been released. The size of the Circulating Supply will affect how quickly the coin price can change.

A sudden increase in Circulating Supply, for example coin founders releasing held coins into Circulating Supply, can lead to a significant downward change in the Money Price. Usually, coins held by the Company/Founder are locked in a smart contract and are only released at scheduled intervals (usually over years) to avoid this.

Market Demand

Market/Market Demand is a concept that is easy to understand but difficult to measure. If there is a limited Circulating Supply, a high market demand will often lead to a high price.

Market Demand is simply: how much people are willing to pay for the coin. The higher the demand, the higher the price. A low Market Demand usually drives the price down. One thing to remember is that a lower price will not always lead to a higher Market Demand.

Market Demand is difficult to measure because it is influenced by hard-to-measure external forces such as investors' emotions and news. Market Demand and Coin Price rise after news about high Bitcoin prices, for example.

Cryptocurrency Psychology

When looking at the price of a coin, there is something to be said about the psychological factors that play a role. For example, a cryptocurrency that hits $1 goes through some sort of psychological milestone. We can say the same about Bitcoin when it hits $1000, $10,000 and more recently $20,000.

A coin that exceeds a certain price increases serious market demand as it 'proves' the value of the coin. It is a psychological state that if a cryptocurrency goes beyond a certain price, that price becomes fixed in the minds of the public and possibly the coin either sits around that price and becomes the new 'price' that people adjust accordingly.

For example, a cryptocurrency that rises from 3 kurus to 1 TL and remains at 1 TL for a while will probably fix this 1 TL value as the 'value' of that cryptocurrency.

This may lead people NOT to sell below this price and that price becomes the new support line.

Note if the ICO price and Coin have price corrections. You also want to keep in mind the cheapest price traders paid for the coin when predicting price support/resistance.

This is more true for NEW coins that have just exited the ICO over coins that have been in the market for a long time (when the price stabilizes). For new coins with enormous returns from an ICO (like 10x-100x), investors who buy at pre-sale prices get serious profits.

For example, let's assume that the ICO price with ICON (ICX) is about 11 cents, investors bought from the ICO can sell for 1 dollar and still make 9x returns. If the price is $4 (current price), they can sell for $4 to .20 cents and still make multiples of at least 2x Return on Investment (ROI).

What does it mean?

If there are more investors holding large amounts of coins that they bought cheaply during an ICO, it may be harder for the coin price to rise without a serious correction.

Investors who buy at the ICO price often need to stabilize the coin in order for the coin price to really pump.

This 'purification' happens when there is a fix and the people who bought the coin at the ICO / Presale 'sell' their coins and make a profit. New buyers come in and buy at a higher price, and this becomes the new fundamental support. The more people buy at higher prices after the ICO, the more stable the price becomes;

Therefore, it is not a good idea to immediately buy a coin from the ICO without waiting for a major correction that washes away the initial investors.

Market Value: The most important factor for investment value

Market cap or market cap is the most important number associated with a cryptocurrency. You should carefully study the Market Cap because it is the easiest factor associated with an altcoin to measure and understand.

Market Cap is the value of all units of an altcoin currently in the market. It can be easily determined by multiplying the Circulating Supply by the Coin Price. If IckCoin's Circulating Supply is one billion and IckCoin's Coin Price is 1 Turkish Liras, IckCoin's Market Cap is 1 billion Turkish Liras.

Market Cap is vital because it determines how much potential ROI (Return on Investment) you can generate.

A high market cap means there is less room for the coin price to increase. A low Market Cap indicates that an altcoin is capable or capable of further growth.

It is good to know the amount of potential price increase because it can determine the Return on Investment (ROI) from a cryptocurrency. ROI is always a good thing because it is the amount of money you can earn from the investment.

ICOs and Market Cap

Market Cap can also tell the potential value of an Initial Coin Offering (ICO) and is one of the most powerful metrics investors can use to gauge how profitable an ICO can be in the short and long term.

This way, it is easier to see a greater return on investment by investing in an ICO with a lower market cap than an ICO with a larger ICO. It also depends on market sentiment.

However, if you invest in a cryptocurrency during the ICO and it hits a $5 million market compared to a $100 million market cap ICO, it's much easier for your $5 million market cap to go from 500% to $25 million. Your $100 million ICO will reach $500 million.

Some traders use Market Cap to bargain. They look for good ICOs or altcoins with potential value and low market cap. These features could be a sign of a good cryptocurrency that the market either ignores or has yet to discover.

Market Cap and Behavioral Investors

Value and behavioral investors pay close attention to Market Value, as it can give an indication of investors' attitudes towards a particular cryptocurrency.

A high market cap can indicate investors like an altcoin, willing to pay more for it and a lot of trading on the particular cryptocurrency.

A lower cap could reveal a cryptocurrency that investors don't want at any price. Of course, it all depends on the market sentiment at the time.

Reading the Market Cap this way can help investors pick up future bargains. A low Market Cap may indicate that investors do not understand the potential value of the technology involved, for example, in an ICO. A high market cap for another ICO may indicate that investors are overestimating the potential of this altcoin.

There are also very unreasonable factors that inflate Market Values. The high Market Cap for Bitcoin is partly due to the fact that it is the only cryptocurrency that many people are familiar with.

Many investors make the fundamental mistake of mixing Bitcoin and cryptocurrencies in general. Some assume that Bitcoin is the only cryptocurrency in existence, so it is the only thing they invest in. Others avoid altcoins altogether due to well-publicized problems with Bitcoin.

Understanding such behavioral factors can help you better use Market Cap in your analysis.

Why is it better to investigate further?

Market Cap, Total Supply, Circulation, Supply and coin Price are just the beginning of what you need to know about a cryptocurrency or ICO. There are many other factors that can affect its price.

Other factors include technology, marketing, investor psychology, economics, politics, regulation, reputation, crime, market hysteria, news media, forks, rumors, plans and market sentiment. You cannot discover or predict everything, but it is possible to learn a lot through research.

The best advice for an altcoin investor is to do your general research. After doing the fundamental analysis, do as much research on the ICO cryptocurrency as you do. Try reading or listening to anything related to cryptocurrency, even tracks with conclusions you don't agree with. The more you know about a cryptocurrency, the better.