How to Start Trading Cryptocurrency - Cabot Wealth Network

Comments

  • Bruce K.

    What makes a specific crypto trade worth making? With stocks, we can look at company fundamentals, stock valuation, price momentum, etc, but only momentum would apply to cryptos. What are some of the metrics for picking a crypto? Thanks.

    • Brad S.

      Metrics like market capitalization, active users, total wallets, etc. are a place to start but are subject to manipulation due to the ease of creating multiple wallets and wash trading. Coinmarketcap.com offers some useful tools for assessing fundamentals, including identifying founders (useful since it’s a bet on the team and their planned use cases). The network volume to transaction ratio (NVT) is sometimes referred to as the P/E of crypto as it compares the market cap to the utilization rate (as measured by transactions) and can indicate if the speculative value of tokens becomes disconnected from network usage. Electrical Capital recently looked at the addition of developers as a metric of token growth (https://medium.com/electric-capital/electric-capital-developer-report-2021-f37874efea6d), with the idea being that growth of the respective ecosystems’ “brainpower” is a useful indicator of the adoption of the technology behind it. All that said, most traders employ technical analysis tools like moving averages, Bollinger bands, and chart patterns to identify entry and exit points.

  • John I.

    Do I still need to set up a wallet if I purchased crypto through Cash App or PayPal? How is it different?

    • Brad S.

      Those would both be categorized as custodial wallets. The upside is it’s easier and more convenient. The downside is that you’re trusting a third party for the security of your assets. The outside risks to custodial wallets would be things like a hack of the company itself or government interventions (Canadian truckers had some custodial assets frozen, sanctions on Russian citizens are freezing access to custodial holdings, etc.). With your own non-custodial wallet, you reduce those risks but take on more responsibility for your own security. There are non-custodial hardliners out there, but I’ve seen too many people lose assets to phishing scams or lose seed phrases to fall in that camp. It’s a personal (and very hard) question.

You must log in to post a comment.

Enter Your Log In Credentials

This setting should only be used on your home or work computer.

Need Assistance?

call Cabot Wealth Network Customer Service at

1 (800) 326-8826