5. What Crypto Metrics should I know?

Wednesday 23rd February 2022

Crypto Metrics are numbers that investors use to decide whether to buy, sell or hold a crypto.

Crypto Metrics are numbers that investors use to decide whether to buy, sell or hold a crypto.

As of today, there are 9,381 cryptos being actively traded across 457 exchanges! This makes it hard to decide whether a cryptocurrency is worth investing in.

If you are a serious investor, you must know about the important crypto metrics.

The Basic Crypto Metrics are:

  1. Supply metrics (Circulating, Maximum & Total)
  2. Capitalization metrics (Market Capitalization & Fully Diluted Market Capitalization)
  3. Volume
  4. Price metrics (OHLC, ATH, ATL)
  5. Holders' Statistics
  6. Return on Investment
  7. Total Value Locked (TVL)

1. Supply Metrics

Circulating Supply is the number of coins/tokens that are circulating in the market and are in public hands. Usually, the lower this number, the higher the prices are likely to be.

Examples: The circulating supply of Bitcoin (BTC) increases approx every 10 minutes as new bitcoins are generated with every block that is mined. The crypto with one of the highest circulating supplies is SHIBA INU with 394,796,000,000,000 SHIB.

Maximum supply is the maximum number of coins/tokens that will ever exist in the lifetime of a crypto.

Examples: The maximum supply of Bitcoin (BTC) is 21 million while that of Ether (ETH) is unlimited!

Total supply is the number of coins/tokens that have been already created, minus coins/tokens that have been "burned".

Examples: In the case of Bitcoin (BTC), the circulating supply is equal to the total supply. Binance Coin (BNB) regularly "burns" coins and this helps maintain its price.

2. Capitalization metrics

Market Capitalization is the total market value of a crypto's circulating supply.

Market Capitalization = Circulating Supply x Current Price

Historically, Bitcoin (BTC) has always had the highest market capitalization and Ethereum the second highest. If this reverses, it would be called the Flippening.

Fully Diluted Market Capitalization (FDMC) is the market capitalization if the maximum supply was in circulation.

FDMC = Price x Max Supply

If the maximum supply is unknown or unlimited, like in ETH, then:

FDMC = Price x Total Supply

If the maximum supply and total supply are both unlimited, then we can't calculate the FDMC.

3. Volume

Volume measures how much of a crypto was traded in the last 24 hours.

4. Price Metrics

Open-High-Low-Close prices (OHLC) means the open, high, low, and closing prices for a crypto for a particular time period - an hour, a day, or even a year.

All-time-high (ATH) is the highest price a crypto has ever reached.

All-time-low (ATL) is the lowest price a crypto has ever reached.

You should also check out the high & low prices over the last 24 hours, 7 days, 30 days, 90 days, and 52 weeks.

5. Holders' Statistics

You've probably heard of the term "whales". They are addresses that own more than 1% of the circulating supply of a crypto.

Some of the important metrics related to holders of crypto are:

  • The total number of unique addresses that hold assets in the network.
  • Addresses that have been active over the last 24 hours and 7 days
  • Transactions carried out by the top addresses by balance

6. Return on Investment

Return on Investment (ROI) measures the amount of return on a crypto investment, relative to its cost.

ROI = Profit / Cost

7. Total value locked (TVL) 

Total value locked (TVL) represents the total of all assets deposited in a Decentralised Finance protocol earning rewards, interest, new coins / tokens, fixed income, etc.