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With Bitcoin's yearly gain of 73%, it consistently outperformed the S&P annual gain of 28% and gold's net negative year-over-year decline of -7%. While the spectacular gains of the extended November surge were absent by the end of 2021, the underlying user and network metrics suggest massive future prospects.
According to a PitchBook financial analyst, the average valuation for the global crypto market climbed from $12 million in 2020 to $35 million in 2021, with NYDIG leading the way with a $1 billion valuation.
Within significant industries, including NFT, metaverse, L2 scaling solutions, and rising innovation in the DeFi domain with the emergence of DeFi 2.0, traders will continue to gain a considerable financial fortune in 2022.
Before investing in crypto, have a system for assessing potential transactions and DYOR. You may investigate core value propositions, functionality, community size, uniqueness, and market potential.
Extensive Research
Learning about the market and the major and emerging currencies, as well as their numerous market sectors, can help you build a solid portfolio to withstand future storms.
Once you've narrowed down your crypto possibilities, search for a white paper that contains a roadmap, tokenomics, and information about the team. Consider the marketing presence of the currency, the viability of the whitepaper and its proposed tokenomics, the project's current market state, and the strength of the community and support base.
Portfolio Diversification
Diversification decreases risk by gradually exposing you to markets with potential. Portfolios built on just Bitcoin and Ethereum would be regarded as unfavorable due to their strong correlation; Ethereum generally mirrors Bitcoin's price action.
Cryptocurrency networks may be classified by the sorts of users they serve. There are several sub-categories such as Market Movers, NFTs, DeFi, Utility, and Ethereum killers.
The Risk Factors
It's one thing to know the market and diversify, but analyzing the chances of getting gains may go beyond qualitative research. What are some more ways to evaluate a cryptocurrency?
The Market Cap
One of the first technical indicators to examine when analyzing a cryptocurrency is the market cap. The crypto community has a consensus that the more valuable a currency is, the less risky it is. Smaller market capitalizations may provide significant opportunities, but they may also be associated with more volatility.
Transaction Volume
You've found a promising coin with a low transaction volume (in the hundreds of thousands of altcoins). A cryptocurrency's transaction volume may reveal how its users use it. Avoid cryptocurrencies with little trading volume or activity since this may indicate a lack of potential use-cases, community support, liquidity, or even a dead project.
Development Activity
One of the more sophisticated methods for assessing a cryptocurrency's growth potential may be found in public source repositories.
The repository's structure, specifically the number of contributors, provides important developer competency information. In addition to the overall number of active contributors, a single developer resolving issues or bugs is not sustainable and may lead to an abandoned currency. You may measure the developers' expertise and devotion by the code quality and determine whether the project is viable.
Other Key Factors
Community engagement and analysis are sometimes overlooked but are vital to a token's success. It's easy to forget that Bitcoin's early development 13 years ago was driven by early crypto enthusiasts, not corporations or governments.
ProBit Global will celebrate Bitcoin’s 13th anniversary with a one-week subscription offer to acquire BTC at half the market price, cutting the entrance barrier even further for newbie traders eager to construct a new portfolio using the industry's cornerstone asset.
Portfolio diversification options span 700+ tokens including global corporations and early-stage retail prospects as ProBit Global plays an essential role in potentially limiting asset risk through extensive screening.
Final Thoughts
Because the Bitcoin market is so volatile, best practices in cryptocurrency research will always change. Even so, adhering to the principles outlined in this article and doing thorough research may decrease risk and increase potential ROI.
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