Steemit Crypto Academy Week 6 Homework Submitted To @stream4u | Cryptocurrency Market Capitalisations| @bukkyi4u

Source

INTRODUCTION

In fulfillment of my submission to the @stream4u week 6 homework, I would like to first of all define an important recurring variable- that is, market capitalization.

Market capitalization is a term that is used to refer to a particular indicator that is importantly used to keep track of the cryptocurrency value in the market.

It is very important in that it helps to give an idea of how domineering or well-known a cryptocurrency is.

In this article I would use large capital to refer to cryptos with large market capitalization; mid capital for the ones with a medium-scale market capitalization; finally, small capital for those with small market capitalization.

Usually, it is calculated by multiplying the volume of circulatory supply of the crypto by the prevailing price.

DIFFERENCES IN LARGE CAPITAL, MID-CAPITAL AND SMALL CAPITAL IN CRYPTOCURRENCIES

LARGE CAPITAL

Cryptocurrencies that have a market capitalization value above $10 billion are known and referred to as large capital (large cap or large capitalization) cryptocurrencies.

Source

Currently, as can be obtained from coinmarketcap.com only ethereum, Bitcoin and Ripple can be classified as large capital cryptocurrencies.

MID CAPITAL

Mid capital cryptocurrencies referred to the ones with a smaller market capitalization than the large cap or large capital. Hence, this refers to cryptocurrencies with market capitalization that range between $1 billion to $10 billion.

Some notable and well-performing names in this category are Ren, the graph (GRT) and Reserve Rights Token (RSR).

SMALL CAPITAL

Small capital cryptocurrency is a name used to describe cryptos in the market whose market capitalization range fall below the $1 billion cap.

Prominent in this group are the DIA, axie infinity and qlink.

So, while large capital cryptocurrencies have market capitalization which settle above $10 billion, the mid capital range between $1 billion and $10 billion while the low cap fall below $1 billion.

HOW MARKET CAPITALIZATION WILL AFFECT CRYPTO INVESTMENTS

Before making an investment into the cryptocurrency market it is important to compare and contrast the risks as well as the rewards side by side. However, the market cap will give you a very good idea of the potentials that are locked in within each and every single crypto.

Here is a rundown of how market capitalization can affect your investment.

Source

Large Capital

Cryptocurrencies with a large market capitalization may not experience large or tremendous growth within a short period of time. Nontheless, they are regarded as safer investments because they are less volatile than the others.

Still, they may still experience increases in bouts of short periods of time. Interestingly, they have greater chances of surviving the market in the long run and may still amount to reasonable increments after a long period of time.

Mid Capital

They mid capital cryptos have higher risk than the large capital. However, they have greater potentials of growing than the large capital. So, investment in mid capital cryptocurrency has larger potential of growing.

Generally, they have good potentials because they are still growing and at the forefront of increasing their market. Still, they may not be as popular and with a social reach as the large capitals.

Small Capital

Investments in small capital cryptos can 'plunge into the abyss' within the twinkling of an eye. This is because the small market capitalization of these cryptos leave them at the mercy of the market.

However, investments can also skyrocket or explode in an instant. These could unimaginably rake in greater rewards than the large capitals and mid capitals. However, they are less volatile and could even go out of the market without warning!

MY VIEW ON THE TYPE OF ASSET THAT WILL BE MORE PROFITABLE

Source

While the small capitals possess the ability to cause a major explosion in investments, the mid capitals have a very large potential of growing in pursuit of expanding markets and the large capitals may not experience any monumental growth in a short period of time.

However, deciding on the digital asset that may eventually prove to be more profitable would not only be based on market capitalization. Hence, I believe the best crypto investment would still be the large capitals, especially when left for a long period of time.

WHY THE LARGE CAPITALS WILL BE MORE PROFITABLE

I strongly believe that the large capitals would eventually prove to be more profitable based on a few important metrics.

To start with, the large capitals have the greatest chance of remaining in the market for a very long time as long as the cryptocurrency market remains. With this your investment is unlikely to disappear into thin air. This is quite unlike the small capitals which may unfortunately exit at anytime.

The large capitals also have more popularity than the rest and more generally accepted as means of exchanges. Some can even be used as collateral to obtain loans. Also, they have an ever-growing and expanding market as evidenced by their high trading volumes which go as high as $52 to billion(for Bitcoin). This means that your investment is actually going to grow over time while equally remaining safe and relevant.

While the mid capitals have potential to expand, they also involve more risk as they may not have large acceptance as means of exchanges. Consequently, developing to their full potential may be a gamble, after all. The small capitals- though they have the potential of causing an explosion in investments- could exit the market even without any form of warning. Hence, ones investment could be lost permanently.

ADVANTAGES OF LARGE CAPITALS

Large capitals have some advantages which include but not limited to:

1 Less volatility
2. More stable growth in capital
3. Lower risk in investment

Less Volatility

The large capitals have less volatility in that they are not subject to unprecedented sharp changes in price as the mid capitals and small capitals.

This does not mean that the may not experience decrease in prices. However, they are more likely to wax stronger in the long run.

More Stable Growth In Capital

The large capitals have investments which are domiciled with the big dogs. These multinational companies that partner with them have good market benchmarks.

Therefore, they tend to provide more stable returns in investment which can go as high as 9.5% in 3 years.

Lower Risk In Investment

Source

Investing in large capitals greatly lowers the risk in investment. First, your money is not likely to launch to the depths owing to higher volatility when compared to the mid-capitals and small capitals.

Also, they have greater chances of remaining in the market as far as the cryptocurrency is sustained than the rest. Again, they are managed financially by professionally recognized investment experts who know the in and out of the business world and can minimize the risk in investment.

DISADVANTAGES OF LARGE CAPITALS

Some of the disadvantages of large capitals include:

1 Not good for short term investments
2. Minimal growth

Not Good For Short-term Investments

Large capitals may not be good for short-term investments. This is because there may not experience monumental increase in price within a short period of time.

So, investing in large capitals expecting high profit in a short time is not a good idea.

Minimal Growth

The large capitals experience minimal growth haven gotten to a high level of stability and market potential. This is unlike the mid capitals and small capitals that are hoping to leverage on the expanding market.

MY THOUGHTS ON RISK CAPITAL

Risk capital refers to an amount of 'extraneous' money or funds that is invested in highly risky ventures that promise to provide high rewards within short periods of time.

This amount of money if lost may not have a very large impact on your financial status negatively. It is an amount of money which you can afford to do without. So, you decide to invest it in a highly risky venture which could bring in very high rewards if the tides turn positively.

MY THOUGHTS ON PENNY CURRENCY

Cryptocurrencies refer to the small capital cryptos which have the potential of experiencing major explosive spikes in price value within short periods of time.

One can invest in them with the intention of making high profit in the short term. However, they may not be very good options for long-term investments.

ROLE OF WATCHLIST

A watchlist is a feature in some website that enables a user to select pages to follow for real-time information on eventual changes.

In cryptocurrency this refers to cryptos which one has selected to receive real-time information on their changes.

The importance of a watchlist is to give you information on the changes in cryptos as they occur across the three major market caps when set properly.

BEST WAYS TO SET A WATCHLIST

The best way to set a watchlist is to select and include cryptos from the three market caps. Two or three characters from the large capitals should be included.

In the mid capital and small capital space, two or three cryptos can also be selected in each and then set to be monitored.

This would be particularly useful since it has been discovered that the best way to invest in cryptos is to select well-performing ones from the three market caps. Investments can then be made while returns are expected whichever way the market goes. In this way money can never be completely lost and any amount lost in one area can be recovered from the other.

MY WATCHLIST AND AN EXPLANATION OF IT

First, I had to create the watch list from coinmarketcap.com

However, since I didn't already have an account I had to create an account before I could get the watchlist.

While creating the account and email code was sent to me with which I verified the account.

Haven created the account it was now time for me to create the watchlist

In creating the watchlist I had to add the coins I preferred

After adding the coins the watchlist was ready

BRIEF EXPLANATION OF THE WATCHLIST

From the watchlist it could be seen that I added 7 coins. I added three coins including Bitcoin, ethereum and ripple from the large capitals.

Then from the mid capitals I added Ren and the graph(GRT)

From the small capitals I added DIA and axie infinity

Based on a recent studies I undertook these selected coins include the best performing in their respective market capitalisations. However, one can still follow their progress over a period of last 7 days

CONCLUSION

Making investments in cryptos requires one to diligently study the market capitalizations. In that way one can decide on how to invest putting some factors into consideration.

This would include wether money is needed on the short term basis or investments are being made for the long term in which case large capitals win.