Crypto Basics: How To Read CoinMarketCap Like A Pro?

Whenever you type in “Bitcoin price” or even “Crypto” into Google, you’ll find yourself landing in CoinMarketCap (CMC). Being among the most reputable and all-inclusive cryptocurrency data platforms in the global context, CMC gets millions of users every day, including both curious newcomers and full-time crypto analysts. However, most people just scratch the surface of what is available on the platform. But this tutorial will show you all you need to know to use CMC like a pro.

What is CoinMarketCap?

CoinMarketCap is a live cryptocurrency price aggregator that tracks the prices, market capitalizations, trading volumes, and other data of thousands of digital assets. It was established in 2013 and acquired by Binance in 2020. The site serves as an essential resource that one would use to have a general overview of the crypto market at first impression.

The difference between CMC and other price trackers is its depth. The platform does not merely display the number but retrieves hundreds of exchanges and combines the information into a dependable weighted average. This means that when you check a coin price here, you’re seeing a consensus figure rather than the price on any single exchange. This type of reliability is priceless to investors and traders.

How does CMC rank cryptocurrencies?

The ranking system is one of the first things that you will see on the homepage of CoinMarketCap. Each cryptocurrency has a ranking – and the ranking is not arbitrary. This platform primarily orders assets by market capitalization, which is calculated by multiplying the current price of a coin by its circulating supply.

Following is the list of the main metrics on the home page:

• Market Cap: Value of all coins in circulation. The bigger the market cap, the more stable and adopted the coin is.
• Price: The existing weighted average price in all exchanges listed.
• 24h Change (%): The extent of movement of the price over the past 24 hours.
• 7d Change (%): The weekly price action, which is handy to identify short-term trends.
• Volume (24h): The sum of the trades done within 24 hours. Higher volume reflects higher interest in the coin.
• Circulating Supply: The amount of coins that are circulating in the market (not locked or reserved).
• DEX Liquidity:  It basically points towards the total value of crypto assets locked in decentralized exchange liquidity pools, enabling seamless, on-chain trading

The knowledge of these metrics provides you with an immediate macro perspective of dominant assets, growing assets and those that might be losing momentum.

What can you learn from the coin detail page?

To start analyzing any cryptocurrency on CMC, you need to simply click on it on the list and you will be redirected to the specific detail page of that cryptocurrency. The amount of information presented on each coin detail page is a treasure trove of data beyond the price.

Important parts to be noted:

• Price Statistics: All-time high (ATH), all-time low (ATL), and ROI since inception. These values can give you an idea of the position of the coin in its historic price range.
• Market Pairs Tab: This will display all the markets the coin is traded on and their trading pairs. Each market pair has a confidence score given by CMC based on the liquidity of the exchange. Greater confidence implies less effort and more efficient trades.
• Supply Details: This is where you will locate the circulating supply, total supply, and max supply (where applicable). 
• Connections and Social Data: Direct links to the project site, whitepaper, GitHub, and official social media, providing you with a fast means of verifiability.
• On-Chain Analysis — This section uses IntoTheBlock to give information such as holder concentration, transaction activity, and high volumes of transactions – all helpful in estimating real-world usage.
• Security Rating Info: This information aids users in judging the security and reliability of a crypto project by displaying whether it has been audited, possesses validity, and has been verified to be susceptible to security issues.
• Blockchain Info: This section serves as a real-time, transparent ledger viewer, allowing users to track, verify, and explore transactions on decentralized networks like Bitcoin. It offers technical information like the height of the block, volume of transaction, and hash rate, which can be used to confirm the validity and the activity of a cryptocurrency.
• News Section: This section is a 24/7, AI-driven data aggregator that provides real-time updates, analysis, and top news about the particular coin
• About Section: Found at the bottom of the page of the detail page of a specific coin, this section has an educational and research overview of a particular cryptocurrency. It describes the nature of the project, its history, its purpose, its founders, and the technological or economic peculiarities of the project.

Investing time on these sections instead of simply viewing the price is what can make you a smart and informed trader.

How to analyze market trends using CMC?

In addition to the data on each coin, CoinMarketCap also provides a set of powerful tools to make you comprehend bigger market trends. These are particularly helpful when implementing strategies such as moving averages or RSI divergences to your analysis.

The following are some of the most useful trend-analysis tools:

• Global Crypto Market Cap: Located at the top of the homepage, this demonstrates the sum of the entire crypto market throughout time. By observing this number go up or down you have a bird’s-eye view of the sentiment in the market.
• Fear & Greed Index: CMC shows this well-known sentiment indicator that goes between the Extreme Fear (the possible buying opportunity) and the Extreme Greed (the possible warning sign). Historically, buying during fear and selling during greed has proven profitable.
• Trending Section: The “Trending” section shows the coins that have recorded the largest jumps in interest or price in the past 24 hours. Although you cannot be expected to mindlessly follow trending assets, they may put you on alert to unfolding stories or news that moves the market.
• Altseason Index – It is a daily updated indicator on CMC that determines whether the cryptocurrency market is undergoing an altcoin season- a time when the 100 largest altcoins (not including stablecoins) outperform Bitcoin in a 90-day period. When more than 75% of these altcoins are performing better than BTC, then it is an indication of a good altcoin season.

How to track your portfolio on CMC?

Watchlist and Portfolio are some of the features not to be underestimated. By creating a free account, you are able to access:

• Watchlist: Add your favorite coins to the watchlist. This watchlist only displays those assets that are important to you instead of scrolling through thousands of assets daily.
• Portfolio Tracker: Enter your holdings (coin, amount and purchase price) manually, and CoinMarketCap will show you the total value of your portfolio, the performance of each coin, and the profit/loss in real-time.
• Price Alerts: Custom price alerts allow CoinMarketCap to alert you when a coin reaches your target price – ideal to execute a planned buy or sell without looking at the screen all day.

These integrations make CoinMarketCap more than just a passive data source, but an active component of your trading process.

What are the various asset categories on CMC?

Bitcoin and Ethereum are no longer the only ones in the crypto world. CMC breaks down the market into very specific categories, enabling you to filter and browse assets that suit your interests. The important ones are:

• DeFi (Decentralized Finance): Decentralized lending and borrowing tokens, as well as yield protocols. CMC features a special DeFi category of rankings and total value locked (TVL) information.
• Yield Farming & Storage: Segments of users who are keen on passive income by investing in crypto or decentralized storage providers.
• NFTs & Metaverse: The platform also follows tokens which are related with non-fungible tokens and virtual worlds.
• Layer 1 / Layer 2 — Useful filters for investors focused on blockchain infrastructure plays.
• Memes: It tracks tokens that are pushed to a large extent by community hype  and viral momentum. Memes coins are very speculative, but have the potential to provide outsized short-term returns, and this special category will allow you to track the whole space in a single place.
• AI & Big Data: This covers tokens of artificial intelligence, machine learning, and decentralized data infrastructure initiatives. With AI still making contact with blockchain technology, this category can assist you in identifying new narratives in their early stages.

Applying these classifications can help you to not drown in information but instead only consider the sectors that are applicable to your investment thesis.

Conclusion

CoinMarketCap is a lot more than a price ticker. When used well, it is a full-fledged research and portfolio management website capable of positively impacting your decisions in crypto markets. It gives you professional grade information at your fingertips, free of charge, whether it be the market cap and supply behavior of a coin, or the on-chain information and trust rating of an exchange.

This was just a basic walkthrough, but remember, if you truly want to master CMC, navigate beyond just the homepage. Explore coins, dig into coin detail pages, filter by category, track your portfolio, analyze historical data to do technical analysis, and tap into the educational resources to keep growing your knowledge. Ultimately, it’s your own research and efforts that will make you a pro!

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. 

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