Credible liquidity On Investment-worthy Crypto Assets Only on Top 40 Coins
Liquidity is the only means for a cryptocurrency or any particular asset to quicky convert into cash without much price fluctuations. It’s an important technical thereof to consider before digging your fat pockets into crypto-asset investment. This is especially essential with cryptocurrencies. In fact, only a handful of cryptocurrencies enjoy enough liquidity. A renown investor and crypto analyst recently tweeted that only the leading 40 coins on Coinmarketcap have sufficient liquidity.
At present time, CoinmarketCap has a list of 4978 coins yet surprisingly only 40 of them have minimum liquidity. Woo mentioned that investors are looking for both entry and exit liquidity. Since only a few of the coins have credible metrics to ascertain return on investments (ROI); most if not all of the rest; is simply poor investment tools.
Most Crypto Coins are Fresh into the Market
Several commentators to Woo’s tweet pointed out the fact that most of the coins were simply too green for the market. Majority of which have not hit the ten-year anniversary that bitcoin has. Some critics also mentioned scam coins such Bitconnect; despite having massive liquidity could not make good investment vehicles.
Is CoinMarketCap a Reliable liquidity Source ?
On the other hand, it is worth noting that CoinMarketCap cannot be relied upon as the most credible source for crypto trading volume. This is because liquidity is only relative and dependant on the market valuation of a given coin.
Well, a good investment could notably take into consideration liquid assets and illiquid assets on the overall portfolio. For instance, illiquid assets could have massive potential for long term gains just as hedge funds would. However, the determining factor remains to be the length of time you are willing to hold on to them; before selling.
Another commentator would highlight the fact that startup investments are usually illiquid but end up becoming really great investments in the future. Woo agreed to this point but however turned not to talk about by noting that he did not want to “Liquidate’ the main message.
About The Author
Richard M AdrianBlockchain Analyst with a demonstrated history of working in the writing and editing industry. Skilled in WordPress, Editing, SEO Copywriting, Copy Editing, and Blog Marketing. When I am not writing, analyzing bulls/bears - I will be listening to music, reading a thrilling novella or hiking. Email me at Richardmadrian@gmail.com - And we could talk about anything - business or dragons.
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