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How to Use Microeconomics on Crypto Investment

Jan 12 · 2 min read

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And also to determine long-term value.

Microeconomics might look like a bland topic for most people to study. But it’s one of the most powerful tools to determine the long-term value of an asset. Here, we’ll discuss how microeconomics could be beneficial to crypto investment.

How to use microeconomics

Microeconomics analyzes how individuals, households, and firms make economic decisions. Because their decisions matter, using microeconomics will be useful to determine the value of an asset within. To use microeconomics:

1-Look at the ecosystem behavior as a whole

The blockchain ecosystem is a great indicator of what will happen to cryptocurrencies because cryptocurrencies are powered by blockchain technology. By looking at the firm itself and the whole ecosystem, you can find where does the trend go on. Depending on the trend, it allows you to make your decisions more accurately in the long-run.

2-Look at the behavior of firms

Firm behaviors are one of the determinants of cryptocurrencies. Especially on the behavior of blockchain firms will give you a broader idea of what’s happening around the space. Even more, major financial institutions can tell what is up on cryptocurrencies. By looking at various sources to make an analysis, it becomes more accurate to make accurate decisions based on your time.

3-Analyze how coins would work for having a solid market share

This is the first step in analyzing coins in the long-run. It includes technical features and they could be interpreted for the long-run value. In most cases, its economics, algorithms, and business plan tells how they’ll operate. When all the things are written in the paper being added up, a conclusion might be drawn for most cases.

Have you ever used microeconomics to determine which coins to buy? Share your thoughts and experiences in the comments section below.

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