Investing in cryptocurrencies goes far beyond buying an asset 'because it is rising'. The crypto market is volatile, complex, and full of projects with very different proposals.

Therefore, before investing in any token, it is essential to analyze some fundamental metrics. They serve as signals that help you understand if a project is promising, reliable, and has enough liquidity to enter and exit safely.

In this article, we will explain how you need to interpret five of these metrics: trading volume, liquidity, number of holders, market capitalization, and circulating supply.

1. Trading Volume

The trading volume shows how much money has been moved with that cryptocurrency over a certain period, usually in the last 24 hours. This number reveals the level of interest from investors in that asset.

If the volume is high, it means that many people are buying and selling the crypto — which facilitates your operations. This also provides more security, as it shows that there is continuous activity and interest. Conversely, a low volume may indicate that the coin is not in demand or that there is a risk of not being able to sell when you want.

Think of it this way: if you found 'the opportunity of the decade' and no one is buying or selling, it is much more likely that you are facing something akin to a house in a questionable neighborhood rather than a crypto.

How to use in practice: imagine you want to buy a newly launched token. If it has a daily volume of only $10,000, it may be difficult to resell without losses. On the other hand, an asset with a volume above $100 million per day indicates high activity and generally less risk for traders.

2. Liquidity

Although it seems similar to volume, liquidity refers to how easily you can buy or sell a cryptocurrency without significantly affecting its price. Liquidity depends on market depth: that is, whether there are enough buyers and sellers willing to trade at any moment.

Even an asset with reasonable volume can have low liquidity in times of market stress. This means that when trying to sell a larger amount, you may end up accepting a much lower price than expected — the famous slippage.

The combination of trading volume and liquidity provides, in practical terms, how the market of that crypto project is moving at that moment. These are two important points when analyzed individually and even more important when analyzed together.

How to use in practice: in exchanges like Binance, you can see the 'order book', which shows how many people are willing to buy or sell a coin. The closer and more consistent these orders are, the better the liquidity. Avoid assets with low depth or large variations between buying and selling prices.

3. Number of Holders

This metric shows how many different wallets own that cryptocurrency. In other words, it is an indicator of distribution. If few wallets concentrate almost all the supply of a token, it means that the asset is in the hands of a few — which can be dangerous.

Tokens with an increasing number of holders tend to have a more stable and decentralized user base. This can be a sign of organic growth and real adoption of the project.

Here comes a certain philosophical aspect of the crypto universe: since the idea of freedom that this community brings comes from the fact that the decisions made are decentralized (and not dependent on a centralized company or a small group of people), the greater the number of people holding those coins in their wallets, the greater the chance that this theoretical ideal of decentralization is achieved.

How to use in practice: tools like Etherscan or BscScan show the number of holders of any token based on Ethereum or BNB Chain. Observe if the number of holders grows over time and if there is excessive concentration in a few wallets. A highly centralized project can be easily manipulated.

4. Market Capitalization

Market capitalization is the total value of a cryptocurrency in circulation, calculated by multiplying the current price of each unit by the number of units available.

This metric helps to understand the 'weight' of that project in the market. Cryptocurrencies with very high market caps, like Bitcoin or Ethereum, are considered more consolidated and safer. Meanwhile, assets with lower capitalization may have greater potential for appreciation — but they are also riskier and subject to manipulation.

How to use in practice: before buying a token, check if it is of low, medium, or high capitalization. Tokens with a market cap below $50 million are considered 'micro caps' and exhibit greater volatility. If you are just starting out, it may be more interesting to focus on projects with a market cap above $500 million, which tend to be more solid.

5. Circulating Supply

The circulating supply shows how many units of that cryptocurrency are available in the market right now. This data directly influences the price, since, in theory, the fewer coins available, the higher the individual value tends to be — if there is sufficient demand.

Moreover, it is important to observe the total that will still be released. Many tokens have a defined maximum quantity, like Bitcoin (with 21 million coins), while others release new units over time. If the project still has a large part of the supply to be released in the future, this may put downward pressure on the price over time.

Here comes the logic of supply and demand in the face of scarcity: considering the limitation of units offered in a crypto project, if the demand remains the same and the supply is decreasing over time, this means there will be upward pressure on prices. Among other reasons, this is why cryptocurrencies like Bitcoin are said to be deflationary - because, in practice, they contribute to each unit gaining value over time due to this limitation of supply.

How to use in practice: see what the current supply is and the total expected in the whitepaper or on platforms like CoinMarketCap and CoinGecko. If you find that only 10% of the supply is already circulating, the rest may be released in stages — and this could impact the market value later.

How to interpret these metrics together?

Although we pointed out in the second metric that the union of it with the first is very important, it is worth emphasizing that none of these metrics should be analyzed in isolation. The ideal is to combine all of them to have a more complete view of the cryptocurrency. For example:

  • A token with high volume and good liquidity, but with few holders, may be controlled by a few people;

  • A project with modest market cap and constant growth in holders may indicate organic adoption and potential for appreciation;

  • A very promising token, but with a future release of a large quantity of coins, may face selling pressure in the medium term.

Making this combined reading helps you get out of the 'bet in the dark' and build a smarter investment strategy.

Knowing how to interpret volume, liquidity, number of holders, market capitalization, and circulating supply is essential to make safer decisions in the world of cryptocurrencies.

Even if you are just starting, understanding these concepts will give you an advantage over those who invest only based on hype or social media tips.

By using these metrics as a basis, you not only avoid pitfalls but also manage to identify solid projects with good growth potential. Quality information is always the best investment.

Ah, and of course: also count on Binance and its listing process to check more closely if that crypto project is robust or a trap!

#AnaliseCripto #BTC #ETH #DicasDeInvestimento

---

Photo available on Freepik