How To Use CoinMarketCap Like A Pro

CoinMarketCap is one of the most popular websites in crypto. The main page shows a list of all major cryptocurrencies by market cap. Most people just look at it to see which shitcoins are highly ranked thus a good investment. This is an incredibly flawed strategy and will most likely result in losses. In fact, putting money in anything that's not Bitcoin is a very high-risk investment. Nevertheless, here are a few tips to get more out of CoinMarketCap.

Market Cap

Market cap is short for market capitalization. It is the current value of a single unit multiplied by the circulating supply. It is an important number. In general, how higher the market cap; how more robust the cryptocurrency is. However, this is not always true. Speculation and organized price pumps can move up the market price without there being any real value in the project. Up until a few days ago, Ponzi scheme Bitconnect was sitting pretty in the top 10 (until it lost 95% of its value). In the current top 10, we see Ripple on number 3 and Bcash on number 4. Ripple is a useless token issued by a private company. Bcash is a fork of Bitcoin that tries to be the real bitcoin but fails at it miserably. Not projects you would want to invest in. However, it is hard to tell from looking at the market cap alone.

Price

This is self-explanatory, the price of a single unit. But beware of unit bias. Many noobs say things like,"Bitcoin is too expensive for me. I'm just going to buy Ripple. It's so much cheaper!" Don't be that idiot. Always look at the unit price in combination with the total supply.

Circulating and Total Supply

The circulating and total supply are often overlooked although critical numbers. Click on any crypto in the list to see more details. Here's Ripple, for example:

A single Ripple token is worth $1.5, but there's a total supply of nearly a 100 billion tokens. What's also worrying is that there's a huge gap between the circulating supply (only about 40 billion) and the total supply (100 billion). Before putting any money in Ripple; you would want to know where all that Ripple is (spoiler: mostly held by the people running the project) Let's compare this to Bitcoin:

1 Bitcoin is worth about $12,000 at this time. However, with a max supply of 21 million with 16.8 million (80%) in circulation; that tells a completely different story than Ripple. Where would you want to put your money now?

Trading Volume

This number shows how much money is flowing in and out of the cryptocurrency. This is, again, a number that can be manipulated by speculators, organized pump and dumps and wash trading. Nevertheless, the higher the volume, the easier it will be to get in and out of a trade.

So the next time you go on a shitcoin shopping spree; don't look for a high-ranked crypto with a fancy name. Look at the numbers and details instead. If you find something you want to put money in; compare its stats against Bitcoin. Chances are it will make the decision easy for you (buy more bitcoin). If the need to acquire a certain shitcoin persists: don't stop at CoinMarketCap. Google the project. Read the white paper. Read what's being said in forms and crypto groups. Moreover, also think about security. Holding any value on an exchange longer than necessary is a huge risk. Anything you want to keep long-term should be stored in a secure wallet where you control the private keys, preferably a hardware wallet. All in all, simply holding bitcoin and forgetting about it for a few years is probably one of the best things you can do for your finances. Also, if you are really into trading, you could do it on Bitmex; up to 100x leverage on bitcoin and selected altcoin markets. This allows altcoin speculation (and shorting) without the need to hold the underlying asset.

Good luck and happy trading!

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Credits: Picture 1 by Josefa nDiaz, Screenshots (2-6) taken from CoinMarketCap, Picture 7 by Shane Rounce

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@mekongmonkey - Everything about Bitcoin and Cambodia