5 ways to analyze trends in the crypto market

Cryptocurrencies have been around for over ten years now, and they have shot into the mainstream eye in the last six years. The coronavirus pandemic and the ubiquitous stimulant controls gave young enthusiasts two things in abundance, time and free money. Naturally, this seeped into the growing market mania of 2020, a period far removed from today.

Now with the FED’s hawkish stance reinstating the fact that what goes up can go down, knowing where the market is headed is a useful insight for investors. These are a few signals we can look for to understand how the market as a whole is moving.

1. Market value: Market value, commonly called market value, is equal to the token price multiplied by the total number of tokens in circulation. An increase in market capitalization shows that the market is excited about the ecosystem and that there is a net capital injection into the crypto industry. The combined market capitalization of all cryptocurrencies passed $3 trillion at its peak in November 2021, and is currently around $1 trillion.

2. Volume of trades: Volume describes the total number of coins or tokens traded during a period of time. Like securities, trading volume for a coin is usually greater when its price changes drastically during periods of high volatility. Positive or negative news regarding the current state or future plans of a project usually increases the trading volume of a token.

3. Total Value Locked: The total value of cryptoassets placed into a decentralized finance (DeFi) protocol to power the protocol is known as the total value locked for that project. Most DeFi protocols usually allow users to “lock” their assets inside the system to earn interest on their holdings or payouts as rewards. TVL is a metric that indicates the level of adoption of a DeFi project. It has become a crucial benchmark for assessing retail and institutional interest in DeFi projects. The locked-in investments are mainly used to drive the protocol, thus showing how much the market is willing to give to sustain a project.

4. Social Discussions and Emotions: People discuss everything from a project’s upcoming development, to community outreach and more recently, bankruptcy filing on social media platforms like reddit and twitter. While it’s not practical to go through the individual tweets about a specific project, there are certain data points that are quite useful such as the total number of followers on twitter, the tone of discussions on the project’s official subreddit, and even sentiment analysis of how the community is feeling at . a given time about a particular project.

An aggregate of these values ​​for the top 10 tokens can show us how the net sentiment towards the ecosystem has changed over a given period of time.

5. The value proposition of tokens and the ecosystem: We have yet to see how cryptocurrencies and decentralization will evolve in 20 years. A useful task for understanding and analyzing market trends is to actually look at the projects and see what they are building, and the team behind the project. For example, back in the 60s, if a couple of Nobel laureates built a transistor, it would have been a smart idea to have invested in their team and project, as it is known as Intel today. At the token level, we can look at the activity data available for the project on GitHub which shows how robust the project’s development is. A collection of this data will show us how the teams behind the top projects are working to build the ecosystem.

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