A question that I consistently hear from new entrants is: what is the value underlying cryptocurrencies and crypto tokens broadly? It’s clear that speculation is the main driver of prices, but what may not be clear is that there actually is fundamental value underlying the speculation. With the proliferation of new tokens being created though, some tokens offer holders fundamental value while many others do not. How does one differentiate the value from the junk in such a noisy space?
Bitcoin is a volatile asset (relative to FIAT) and this fact should be taken into consideration, especially in the days when the Bitcoin value is moving sharply. Bitcoin and Altcoins have an inverse relationship in their value, i.e. when the value of Bitcoin rises then Altcoins are losing their Bitcoin value, and vice versa. When Bitcoin is volatile, our conditions for trading are kind of foggy. During fog we can’t see much ahead, so it is better to have close targets for our trades or not to trade at all.
Do you have other tips to contribute? I'd love to hear them in the comments