The value of cryptocurrency is determined by the same principle of supply and demand that applies to anything else people want. When demand rises above supply, the price of the digital currency increases. The price of a cryptocurrency is determined by taking the unconverted price directly from cryptocurrency exchanges and converting it into US dollars or another available currency (BTC, ETH, EOS). This data is updated every 8 seconds.
For example, if there is a drought, the price of grain and agricultural products increases if demand does not change. The same principle applies to cryptocurrencies. Supply and demand are an important factor that determines the value of anything that can be traded, including all digital currencies on the market. For example, if more people try to buy bitcoins, while others are willing to sell them, the price will rise and vice versa.
And since the supply of many cryptocurrencies is limited, the increase in popularity has driven prices up. The cryptocurrency market capitalization is the total value of a cryptocurrency. This is calculated by multiplying the price of cryptocurrency by the number of coins in circulation. It's important to do some research to make sure that any cryptocurrency you're thinking of investing in isn't being artificially bot-driven. Experts suggest sticking to Bitcoin and Ethereum, and not letting cryptocurrencies account for more than 5% of your total portfolio.
While market capitalization (the total value of a company's total shares) can help investors build and maintain a balanced investment portfolio, it doesn't necessarily apply to crypto investors. However, market capitalization can still be used as a guide when investing in Bitcoin and Ethereum. It can help you determine how much you should invest in each currency and how much risk you should take on.