Re: Make even more profit on crypto trading with trade-mate.io
Which cryptocurrencies are the best to invest in
For a long time, the common attitude to cryptocurrencies was uncertain. But today we can see how the infrastructure of digital currencies is developing steadily and the crypto market continues to grow, despite the ambiguous attitude of institutions and states.
The popularity of one of the main resources used to observe the crypto market dynamics - CoinMarketCap - is also growing. The service provides a cryptocurrency rating by capitalization and price movement, displays market liquidity and other key indicators, such as the Bitcoin dominance index,
Growth factor
To identify promising cryptocurrencies for investment, it is necessary to identify key factors that affect the crypto market growth:
- Liquidity
- The developers activity and progress
- Volatility and stability of the coin exchange rate
- Prospects for future growth
Often, crypto investors focus only on CoinMarketCap indicators, which is not quite correct.
For example, a large pump of the Bitcoin SV cryptocurrency recently took place, after which the second hard fork took the next position after the "original" Bitcoin Cash. Bitcoin SV was removed from Binance exchange, resulting in a sharp decrease in the liquidity of the coin and this allowed to pump exchange rate on the cheap. But there were no fundamental reasons for growth. However, the sharp growth attracted the attention of new investors, who contributed large amounts of money to the market and significantly raised its capitalization.
When evaluating cryptocurrencies, you should take into account not only fundamental factors and analyze the news background along with prospects, but also study correlation between different cryptocurrencies. To do this, you need to determine the correlation coefficient.
A positive correlation indicates that the price of cryptocurrencies behaves almost identically or at least one partially repeats the movement of the other's exchange rate, depending on the size of the coefficient. The closer it is to 1, the stronger the correlation is. If the correlation is negative, the opposite is true - prices move in reverse. If you make a portfolio only of positively correlated cryptocurrencies, then when the leading coin falls, the entire portfolio will be in a drawdown.
Tradingview charts that are used in the Trade-mate.io autotrading service allows you to define correlation coefficient. To increase profits, the platform provides a Smart Trade function with trailing support. The service allows you to track the dynamics of cryptoportfolio and displays detailed statistics on it.
When choosing cryptocurrencies, evaluate the reasons for their growth and future prospects. The portfolio is built based on a personal risk profile: some prefer to choose some of the top 10 or top 15 cryptocurrencies (except Tether and Bitcoin SV in this case), while others seek to diversify the portfolio by combining more conservative coins such as Bitcoin, Ethereum and Ripple with smaller altcoins. The selection of assets also depends on the investment period: for short-term investments, less liquid altcoins are suitable due to high volatility, while for medium - and long-term investments, larger coins are better due to security.