“Crypto Boom or Bust? Comprehension of ICO, TVL and market capitalization”
The world of cryptocurrency has made a long way from its institution in 2009. From Bitcoin to Ethereum, Altcoin and even some of the new tokens such as Cardano and Polkadot, the landscape is constantly evolving. But with great power comes a great uncertainty and something that investors are anxious to understand is how cryptocurrencies grow in value.
What is a ico?
An offer of initial coins (ICO) is a way for new cryptocurrency projects to raise funds from investors by creating and distributing digital token. It is similar to an IPO (initial public offer), but with a much smaller scale. In an ICO, the project creates a token that represents the property in its technology or product below, so it issues these token to investors in exchange for their investment.
TVL: monitoring of the token value
Taken value (TVL) measures the total value of all pending digital activities on a blockchain network. It is a crucial metric to understand the overall potential of health and growth of a cryptocurrency project. Tvl is calculated by adding the total value of each token, including those that are still in circulation and those who have been sold or exchanged.
Mercato capitalization
The market capitalization (MC) measures the total value of all the actions in circulation of a company’s actions. It is an indicator widely used to evaluate the financial health and performance of the market of a company. In the cryptocurrency space, MC is often compared to the classes of traditional activities such as actions.
ICOS: a double -edged sword?
While the ICOs have been advertised as an exciting way for the new projects to raise funds, some investors are becoming worried about their potential impact on the largest market. That’s why:
* Scamme and Fakes: With so many new projects that emerge every day, it is not uncommon to come across scams or falsi.
* Saterization overcomes: The number of ICO has increased exponentially in recent years, leading to an excess of token on the market. This can involve excessive value and a reduction in value for existing investors.
* Regulatory uncertainty: governments are starting to notice the rise of cryptocurrencies and their potential impact on traditional markets.
TVL: a growing trend?
While TVL is still relatively small compared to other activities such as shares or properties, its growth rate has been impressive. Only in 2020, TVL increased by over 500% compared to the previous year.
* Growth rate: The average TVL of all cryptocurrencies on Binance Coin Standard (BCS) is now higher than $ 100 billion.
* Trust of investors: As investors feel more comfortable with cryptocurrencies and ICO, they are willing to invest in new projects.
Market capitalization: a balanced view
MC can be a useful metric to measure the general health of a cryptocurrency project. However, it is essential to consider other factors such as TVL and feeling of investors before making investment decisions.
* Analysis of feeling: A positive trend in MC does not necessarily translate into a strong market for the activity below.
* Competition: The cryptocurrency market is highly competitive, with many projects for the attention and attention of investors.
In conclusion, while ICO can be exciting and innovative ways for new projects to raise funds, it is essential to approach caution. Tvl has shown significant growth in recent years, but MC remains a crucial metric that should be taken into consideration when evaluating the general health of a cryptocurrency project.
Investors should also take measures to mitigate potential risks such as scams, overdoing and regulatory uncertainty. While the cryptocurrency market continues to evolve, it is essential that investors are informed and adaptable. In this way, they can make more informed decisions and navigate in the complexity of this rapidly evolving space.