On Bitcoin and broadcast for more than 72% of the market capitalization of the WCC digital currencies, so the focus of the press is focused on them. The launch of futures contracts for these cryptocurrencies has also increased their appeal. Similar hopes are pinned on potential ETFs (which are still awaiting regulatory approval).
Most investors and traders haven’t even started to dive into the world of digital currencies. However, there are those who recognized the potential of this direction early enough and found themselves on the “crest” of the cryptocurrency wave. And they know that currencies include rough diamonds and doomed outsiders. Traders are free to choose between thousands of tokens in search of those who can move into the phase of explosive growth.
Monero and Solana are among the elite digital currencies. As in any other market, the investors who are able to determine the real value of the asset derive the greatest profit. And digital currencies, which are just over a decade old, offer many opportunities (but with a variety of risks).
And given that profit is inextricably linked with risks, the more “savvy” an investor is, the better.
Digital currencies offer a ton of investment and speculation opportunities
As of March 30, 9,024 digital currencies have been registered and the number of tokens is growing every day. 9,022 cryptocurrencies (i.e. everything except bitcoin and ether) provide 28.8% of the market capitalization of the market.
As the digital currency segment matures, liquidity will also grow. At some point, the number of tokens is likely to peak and then begin to decline, as many never reach the critical mass needed to survive.
Volume, open interest and demand from various categories of market participants are key drivers of liquidity growth. Currency is a medium of exchange. Illiquid funds cannot provide efficient transactions. And as competition from outsiders diminishes, a core group of liquid instruments will foster the development of derivatives, including futures, options, ETFs, and exchange-traded bonds.
You can also expect the development of the swap market and the growth of token conversion volumes. In fact, the leading cryptocurrencies have already reached this stage. Coinbase’s upcoming IPO will only accelerate the maturation process as a resilient platform will erase memories of Mount Gox’s collapse.
The creation of a liquid and transparent trading environment is an important step in the development of an asset class.
The larger the capitalization, the higher the liquidity
In the world of digital currencies, liquidity depends on market capitalization. Bitcoin and Ether have become very liquid.
BTC’s market capitalization of $ 1.1 trillion is more than five times the market value of ETH (which is $ 213.4 billion). But the lower we go down the list , the more rapidly liquidity falls.
The capitalization of the remaining tokens does not exceed $ 48 billion. Only seven of them are estimated at $ 25-41 billion. 30 currencies are worth less than 4 billion each.
Monero and Solana are in the top 26 of the cryptocurrency world.
Monero : in service since 2014
Monero emphasizes transaction privacy. The network is still a distributed ledger, which means that any user can send or broadcast transactions, but an outside observer cannot determine the source, amount or destination. A full description of Monero can be found on the Mymonero website .
As of March 30, Monero ranked 26th in the cryptocurrency rating with a market capitalization of $ 4.456 billion; tokens were traded at $ 249.
Since 2014, Monero has skyrocketed from less than $ 0.40 to an all-time high of $ 426. The minimum was recorded in 2015, and the maximum was at the beginning of 2018 (right after Bitcoin first hit the $ 20,000 mark).
Since March 2020 (when a local minimum of $ 35.69 was recorded), the currency has been showing stable growth.
Solana: open infrastructure
Solana is a web-scale blockchain that can be used to deploy fast, secure, scalable and decentralized applications and marketplaces. The network security method was chosen as a “proof of stake” approach with a low barrier to entry; also transactions are timestamped to maximize their efficiency. The Solana website is solana.com .
On March 30, the market capitalization of the currency was $ 5.170 billion, with one token worth $ 19.34. Solana was ranked twenty-second in the cryptocurrency rankings.
Solana can be called a “newcomer” to this asset class as it appeared in April 2020. The trading range is capped at 50 cents and $ 19.34. The current Solana rally began with a local low of $ 1.30 at the end of December 2020.
Liquidity is the key to success
Liquidity is critical to the survival of cryptocurrencies. Only forty-one tokens (i.e. less than 0.46% of them) have a market capitalization of more than $ 3 billion. Fifty-five (0.61%) are over the 2 billion mark.
Both Monero and Solana are among the digital currency elite. And while their current ranking does not guarantee success, they still have a much better chance of survival than thousands of other tokens.
The number of new members continues to grow, and the ratings are rewritten daily. Eventually, this asset class will become more compact as it “matures”.
Investing (or speculating) in cryptocurrency requires knowledge and a little luck. The more literate an investor is, the higher his chances of success. One of the main points to pay attention to is liquidity. The dynamics of market capitalization will tell you whether a token can gain critical mass, or whether it will be forgotten.