As an investor, you make money when you can identify assets that are either under or overvalued.
Building wealth with crypto is no different. If it were easy to determine the future value of cryptocurrencies, NFTs or other cryptos assets there would be no risk and also no opportunity.
This article examines the difference between crypto ratings and crypto rankings, explores the popularity of crypto rankings, and discusses the advantages of crypto ratings over the less robust crypto rankings.
There are two major analytical tools used by investors to evaluate crypto assets:
1. Crypto Rankings
2. Crypto Ratings
What are Crypto Rankings?
It is common for all levels of crypto investors to check crypto ranking sites like CoinMarketCap and CoinGecko before even getting out of bed. Depending on relative market volatility, they may check again over their morning coffee and multiple times throughout a given day.
Crypto ranking sites have been popular for over a decade because they stack more than 20,000 crypto assets based on widely available public data. Like a football league table, crypto assets are ranked one on top of the other according to their key performance measures. Crypto ranking sites are based on three major indicators: market capitalisation, trading volume, and price percentage.
- Crypto Asset Market Capitalisation – This gives investors a notion of the entire market value for a specific crypto asset determined by the total market value of all outstanding shares. This is the total market value of a cryptocurrency’s circulating supply. Crypto Asset Market Cap = Current Price x Circulating Supply.
- Crypto Asset Trading Volume – This gives an indication of how much trading activity there is for this crypto asset and helps investors understand volatility.
- Crypto Asset Price Percentage – This gives crypto investors an indication of how large a specific cryptocurrency is related to the size of the entire crypto market.
Crypto Asset Market Capitalisation (Market Cap) Example
Market capitalisation is a key metric on crypto ranking platforms and its popularity for use in trading amongst investors and traders warrants a complete understanding. Market capitalisation or “market cap” as it is widely known, is calculated by multiplying the price of a crypto asset by its circulating supply at any given time.
Bitcoin’s market cap is found by multiplying the current number of coins in circulation — over 19 million — with Bitcoin’s current price. This means that during crypto prices’ frequent fluctuations, their market caps also fluctuate.
At the time of writing, Bitcoin’s price is $16,610.23 USD with a circulating supply of 19,209,650 BTC.
$16,610.23 current price of a Bitcoin X 19,209,650 BTC = $319,076,704,719 (Current Bitcoin Market Cap)
Crypto Ranking Sites Show Relative Market Caps
But Why is a Relative Market Cap So Relevant to Crypto Investors?
Knowing the market cap of cryptocurrencies enables investors to group crypto assets into investment categories such as large-cap, mid-cap or small-cap. An asset with a large market cap can signify less risk but slower growth potential when compared to an asset with a smaller market cap, which may grow exponentially although at a larger risk.
On crypto ranking sites like CoinMarketCap and CoinGecko the rank of a cryptocurrency is largely dependent on its market capitalisation.
Because investor sentiment and industry news greatly impacts the price and therefore the market cap of a crypto asset, crypto rankings are swayed by pop culture, news, misinformation, influencers, and other factors often unrelated to the cryptocurrency’s underlying value.
Basing investment decisions solely on crypto rankings may therefore not be a reliable strategy. Inflated market caps cause prices to swing and the unpredictable nature of some token supplies can easily influence the ranking of a crypto asset.
Crypto Rankings Provide Classification
Crypto Ranking sites also help traders and investors classify crypto assets based upon specific categories such as Metaverse and DeFi as well as specific numeric factors like volume or circulating supply. By categorising and banding trading and investment decisions can be made by comparing similar crypto assets.
Crypto Ratings Provide Advantages Over Crypto Rankings
Because market capitalisation, volume, and price percentage are simple calculations, crypto ranking sites like CoinMarketCap and CoinGecko provide value by organizing and presenting data that everyone in the market has relatively easy access to. However, because every investor has this information, it is unlikely to provide unique opportunities. In contrast, crypto rating services like Evai take into consideration a multitude of factors and key performance metrics based on robust academic research and economic modeling. While crypto rankings provide only one individual factor at a time, Evai Crypto Ratings take into consideration 6 key factors and over 20 key performance indicators. This robust analysis makes the Evai platform a key destination for your trading and investment insights.
Who Offers Crypto Ratings?
The concept of financial ratings has been around for over 100 years, but they have only recently been introduced into the crypto sector. After decades of rating traditional assets, in 2017, Weiss Ratings began offering crypto ratings, calculated with a mathematical equation each day.
Pioneering a new approach to crypto ratings, Evai has embraced Nobel Prize-winning research and combined it with the latest in Artificial Intelligence and Machine Learning technology to provide investors with an unbiased and clear picture that investors can use to build and protect profits.
What Is Unique About Evai Crypto Ratings?
Evai Crypto Ratings incorporate two powerful evaluation methods:
1. Evai Market Index
The Evai Market Index employs AI and Machine Learning technology to classify crypto assets according to their underlying value. With so much noise it can be easy to forget that some crypto asset investments are backed by real-world infrastructure and can be evaluated in terms of other asset classes. Think of the Evai Market Index as similar to Warren Buffet’s approach to investing. The Evai Market Index looks at the real-world value of investments without speculative behaviors.
2. Evai Trading Score
The Evai Trading Score utilises a multi-factor model coupled with AI and Machine Learning technology to compare an asset’s live performance against its historical data. It compiles complex information across a variety of indicators and performance factors including liquidity, sentiment, risk, momentum, utility, and bias. The Evai Trading Score then provides an indication of a positive or negative price direction along with its potential strength. The Trading Score ranges from +3, +2, +1, to -1, -2, -3 with 0 defining no change in performance.
Utilised collectively, the Evai Crypto Ratings enable investors to evaluate assets based upon their underlying values while using the Trading Score to make critical and timed trading decisions.
Evai Crypto Ratings are Proven
When it comes to assessing the benefits of Evai crypto ratings the data speaks for itself. During the last year, the Evai Crypto Ratings have demonstrated their proven predictive capabilities in spotting the rise and fall of $LUNA.
Summary: Crypto Rankings versus Crypto Ratings
Both crypto rankings and crypto ratings have a place in an investor’s decision-making toolbox and the two can be used hand-in-hand to make better-informed decisions. For investors and traders who place equal importance on the protection of funds and the generation of profits, the new era of crypto ratings powered by AI technology provides a more robust and advantageous tool with which to approach investing. Artificial Intelligence and Machine Learning are set to build trust and confidence within a financial rating model designed to tackle volatility in the world’s fastest-growing asset class – cryptocurrency.
To find out more about Evai crypto ratings and the Evai Market Index and Evai Trading Score register your free account at https://dashboard.evai.io/ and use the Evai PRO 10-Day Free trial passcode – UJDPWG.
