How do people compare the value of cryptocurrencies? USD has become a basic standard to analyze currency so when comparing the value of a cryptocurrency, most people automatically only look at its value in comparison to the USD. What people forget is that, in addition to the USD, you should also compare it to Bitcoin (BTC). Only by doing so will you be able to get a more accurate picture of the value of a specific coin.
When talking about dabbling into the crypto world, I briefly talked about how the exchange of cryptocurrency for cash wasn’t easy. That made me think about how many people talk about whatever crypto they are investing in, to its value in USD and completely disregard other cryptos. Bitcoin is at the top and is the one most people are aware of. The next in line Etherium has a large gap in value between it and both the first (Bitcoin) and the third (Ripple) cryptocurrency.
Exchange for cash is not easy. First of all, there are several cryptocurrency exchange centers around; however, exchanging Bitcoins for cash is not really cheap, and it can actually take a lot of time.
In the current scenario where volatility is the primary characteristic of these currencies, you would end up losing a great deal of money unless you get a fixed-rate deal. Not all localities would facilitate the exchange of Bitcoins. In the situation where you approach a bank, the high transaction fees would still be something you would have to face.
For example, suppose Litecoin (LTC) is valued at $250 and let’s say that you wish to invest in Litecoin. Now, if the prevailing value of BTC is $10,000, then it means that an LTC is one-fortieth the value of a BTC. So, if the value of LTC remains stable at $250, but BTC increases its value to $12,500, then LTC will just become one-fiftieth the value of BTC.
This essentially means that while the value of LTC in terms of the USD has remained constant, its value in relation to BTC has dropped. And when investing in cryptocurrencies, you must ensure that all the coins increase their value in relation to BTC.
You should also keep in mind that the purpose of investing in Bitcoin is to make profits, not to inflate your ego every time you make the right call – this causes people to become less cautious and that can cost them more.
Final Thoughts
Focus exclusively on simply making the right choice, and your investing skills will be sharper by each coin. Currently, there is no way to predict what the future holds in terms of crypto values. So at this point, you’re not getting something that has any kind of sustainable value for the investment. Be vigilant when gauging the value of crypto in the current market, consider BTC and not only USD.
