The fact that there are so many crypto millionaires proves that it’s possible to make money this way, but who decides whether or not you’ll follow the same fate? Well, you do, actually! While success depends on more than just your decision, you can drastically increase your odds by doing all that’s in your power. Sometimes, increasing odds is all it takes. One of the things you can do is track the right trends. Here are nine such trends worth watching out for in 2023.
One of the first things you should investigate is the global crypto market cap. In 2023, as of July, it’s currently at $1.23 Trillion. The market volatility is incredible, with the largest cryptocurrency (Bitcoin) holding almost 48% of the market.
The reasons to check this regularly are the following. First, the market is incredibly volatile, and you can see 1-2% shifts daily, even when there aren’t big movements. The movements can be even bigger without a major regulation or industry event.
While this may not sound as much, there are no other assets that are that big that display such volatility.
Another huge trend you must follow is crypto investment trading volumes. You see, this depends on more than just asset use. This is also affected by the trust in exchanges. Last year, FTX made a huge mess, but Binance is currently doing its best to mend the issue.
This year, trading volumes have surged by almost 130%, a lot but not the biggest surge in history.
Keeping an eye on these trading volumes may give you an early indication of the fact that the market is moving from bearish to bullish. Overall, it’s a good thing to know as a crypto investor.
If you’re an investor, you need to understand that while the major assets may still be volatile, the chance for their growth is really not that high. Sure, Bitcoin, at one point, exploded from several hundred dollars to several thousand and even as much as $60k, but how big of a growth is this in percentages? From $11k to $66k, there’s an ROI of about 600%; however, with ICOs, we are talking about thousands and tens of thousands of percent in increase.
This is why you must always be on the lookout for the top coins today; otherwise, you risk missing out on a massive opportunity to make a profit.
Different generations are treating cryptocurrencies differently. For instance, among Generation Z, there’s virtually no skepticism regarding cryptocurrencies. Younger (digital) generations have no problem accepting DeFi markets, even if they don’t fully understand them.
Millennials are also quite accepting of cryptocurrencies, with about 67% seeing it as a safe haven asset. Sure, it is a volatile market, but it’s also one of the newest major assets. Do you think gold was worth the same during the Renaissance, the fall of the Roman Empire, the Bronze Age Collapse, and World War II? Of course not; even the major assets change value, and the history of cryptocurrencies is too short to pass any judgment.
Older generations are also taking interest at an increased rate, which is something worth paying attention to.
Many people invest in crypto because they’ve seen how many people managed to amass a fortune with a relatively small initial investment capital. In other words, they’re tempted by a potential for high returns and low initial capital.
Then, some people diversify by investing in crypto. The correlation between this asset and some conventional asset types is not high. This makes people invest to protect their resources. In other words, they’re edging against traditional markets.
Then, some people just love the thrill of a speculative market. Remember that, with the right research, this is not a gambler-like behavior, but it’s still adrenaline-inducing.
Lastly, some people want to use crypto as money (especially for cross-border transactions).
There are currently about 9,000 cryptocurrencies out there, but the first ten cryptocurrencies control about 84% of the total cryptocurrency market. As we’ve already mentioned, the first currency controls about 48%.
This means that the market segmentation is not that great.
This may sound odd to you, but this is mostly because you lack a reference point. For instance, 48% for just one cryptocurrency is too much, right? Well, what if we told you that, on the forex market, about 88% of all transactions are handled in USD?
If you want to make money off crypto or, at the very least, keep a part of your assets in this asset type, you must keep track of all the latest news in the field.
First, you’re looking out for new development. A new technology or a breakthrough in the field of blockchain or anything related can make a world of difference.
Then, you’re looking for massive scandals with big companies; for instance, FTX bankruptcy is a massive cornerstone in the world of crypto, and it has impacted a market in more ways than one.
Lastly, keep in mind that crypto is still, for the most part, unregulated. Huge initiatives like MiCA are a step in the right direction. A few years back, the Chinese crackdown on crypto had the opposite effect on the field. All in all, you need to know what’s happening in the crypto world.
When investing, you must understand that the market can be bullish or bearish. People will expect the market to either grow or decline. Now, remember that there are numerous pitfalls here. As an investor, you should study charts; remember that this is not an exact science. People spend their entire lives making financial projections and making mistakes. Don’t assume you’re the only one understanding what’s going on.
Second, don’t believe the hype. Just think about the saying that when you hear of a financial trend, it’s probably already too late for you to make money this way. Therefore, while you want to trust your instincts, take it easy.
Crypto fraud statistics are important to watch, but they can also be incredibly misleading.
For instance, the fact that crypto scammers were taking billions more than five years ago doesn’t mean anything when you consider the worth of the entire crypto market then and today.
In fact, according to some analysis, in 2023, crypto scams are down by a significant margin. This can mean many things. First, crypto users are getting more cybersecurity-savvy. Second, the measures introduced by cryptocurrencies and exchanges are becoming more effective. Combined with the fact that the blockchain is getting more sophisticated by the hour, we might look at a much brighter future.
Telling what’s relevant and what’s just a vanity metric is the toughest challenge for any investor, regardless if we’re talking about stocks or cryptocurrency. WIth the above-listed nine factors on your mind, you’ll have a much easier job understanding what you’re dealing with.
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