From its humble beginnings, the world of cryptocurrency has grown into a full-fledged industry in which hundreds of new tokens are brought to market every year. As investors and developers alike look for ways to determine which top cryptocurrencies will be successful and which will fail, there is no shortage of metrics that one can use as indicators of future success or failure.
While each metric offers insight into any given token’s health and growth potential, they are different. Some are more predictive than others, while others have a higher degree of variability. That’s why we’ve chosen just five key metrics to focus on.
Web Traffic/Google Trends
Web traffic is an essential factor in measuring top cryptocurrencies. However, it could be a better measurement because it only reflects the activity on one site. It doesn’t account for how many people go to other sites or use mobile apps to access cryptocurrency information. However, web traffic is still a good indicator of a cryptocurrency’s popularity and interest.
The most popular cryptocurrencies tend to have high web traffic on their websites and social media platforms. They also encourage discussion on their “brand.”A high volume of web visitors indicates an active community around the coin/token.
It is also worthwhile to see how Google Trends evolve for Bitcoin and other cryptocurrencies. Higher search activity can signify growing interest in the project.
- Older coins are more established and have more developers than newer coins.
- Older coins also have a more extensive user base, which means they have greater stability.
Developer activity measures how much work is being done on the codebase. It’s a good indicator of the health of a cryptocurrency because it shows how much interest developers have in working with a cryptocurrency and improving it. To measure developer activity, you can look at three numbers:
- The number of commits (commits are when developers make changes to the codebase)
- The number of pull requests (pull requests are when a developer submits an update for review)
- The number of issues (issues are bugs or features that need to be addressed)
Market capitalization (or market cap) is a figure that represents the total value of an asset. It can be calculated by multiplying the current share price by the number of outstanding shares. For example, if a company has one million shares at $1 per share, its market cap would be $1 million.
The reason why we like this metric is that it allows us to make comparisons between companies of different sizes and sectors. So let’s say you have two companies. Company A has 20 employees and currently trades at $15 per share. Company B has ten employees but trades at $60 per share.
Both companies have similar market caps ($300k for Company A vs. $1M for Company B) even though there are five times more shares outstanding in Company B than in Company A (5M vs. 1M).
Keep in mind market capitalization can also be a deceiving metric.
Community growth is another critical factor in a cryptocurrency’s success. The size of the community determines how many people are interested in it and thus use it.
It also indicates how many people are investing in it, directly impacting its value. Bitcoin has experienced an impressive increase in its price due to an increase in interest from investors and users over the years.
The top cryptocurrency lists are constantly changing, and there’s no way to predict what will happen in the future.
But if you keep an eye on these four factors, you can stay on top of the trends and make smarter investment decisions.