The crypto market, also referred to as the cryptocurrency markets, is a global ecosystem that operates 24/7, unlike traditional stock markets. The value of cryptocurrencies is measured in terms of total market capitalization, or “market cap.” Investors may gain exposure to this dynamic asset class through a variety of investments, including purchasing cryptocurrency outright or investing in funds that provide indirect access.
The volatility of the crypto market makes it important to only invest an amount you’re willing to lose. This could help avoid catastrophic financial consequences in the event of a loss. Additionally, since cryptocurrencies aren’t registered securities, they aren’t protected by the same laws that govern investments in securities.
Cryptocurrency prices can change rapidly based on a number of factors, including news and overall market sentiment. Positive news, such as regulatory approvals or technological advancements, can push prices up. Conversely, negative news—such as security breaches or regulatory crackdowns—can drive prices down. In addition, large traders, known as whales, have the power to manipulate prices through massive trades.
Vetting a crypto investment involves different metrics from those that are used in the stock market, and may include assessing real-world adoption potential, reviewing technical specifications, studying founders and developers, scanning community engagement, and evaluating competitors. Diversification is critical, and you should never put all your eggs in one basket—it’s best to spread your assets across the thousands of available cryptocurrencies.
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