With the cryptocurrencies becoming one of the most popular subjects in the world of finances, many investors are looking for new ways to make them work. Even though the cryptocurrency market is highly volatile, it has already helped create numerous millionaires.
Meanwhile, many inexperienced investors have suffered failures due to extreme volatility and the lack of information. Why would you follow a cryptocurrency index? Can it help you earn millions of dollars? Let’s take a closer look.
What Is a Cryptocurrency Index?
We’ve decided to start with the basics. A cryptocurrency index is a platform that provides the interested party prices and capitalization data of numerous cryptocurrencies. FYI, today more than 2,500 cryptocurrencies exist. Some of the most used cryptocurrency platforms are:
These websites and platforms are necessary for traders to acquire the latest price information. They can also be used to monitor and compare the growth of crypto assets.
Cryptocurrency indexes often provide different types of information. They can either give you full data on all the coins available on the market today or offer a certain list according to the required specifications.
The most respectable crypto indexes list all the coins available for purchase and trading at a given moment. Monitoring such an index is much easier than collecting information from numerous crypto exchanges.
What Data Can You Collect By Monitoring A Crypto Index?
The most important data you get access to is the price. Experienced traders acquire useful trading-related information. Crypto index funds use this data to make important investment decisions.
- Market cap – the amount of Fiat money currently invested in the currency.
- 24H volume – the trading volume of a certain cryptocurrency for the past 24 hours.
- Exchange rate – the latest exchange rates between each coin and USD/GBP/EUR and exchange rates between each other.
Besides that, you can check additional information about the currency, such as maximum supply, price graphs over certain periods of time, and a list of exchanges where you can trade the cryptocurrency.
Each one of the indexes has a certain set of information available for your use. You are unlikely to find one, which is all-encompassing. That’s why traders and crypto index funds pick several indexes for monitoring the coin market.
Where Do Crypto Indexes Get Their Information?
The cryptocurrency exchanges. These exchanges offer the most extensive information about the trading activity, helping index funds create data graphs, provide the latest price information, and make a certain analysis.
Since cryptocurrency prices may somewhat vary from one exchange to another, depending on the market, the indexes gather information from numerous exchanges to ensure the highest data accuracy.
Why Follow The Cryptocurrency Index?
So why would you follow it? The crypto indexes offer the most accurate and highly valuable information about cryptocurrencies. They save you time by monitoring numerous exchanges and singling out the most important data.
If you are planning to invest in cryptocurrencies, make transactions involving them or simply consider your investment options, learning how to follow cryptocurrency indexes is a must.
