Question: Doge is at #4 on Market Cap size - does this mean people have invested $65,818,633,420 into Doge coin?
"Market Cap means real money invested in the markets!" I heard a popular youtuber say..... Is this the riskiest assumption in crypto?
To understand this better I thought I would do a little digging - Disclaimer:
a. I'm just trying to get my head around this topic so no expert but the concept seems pretty simple.
b. I'm thinking about the market as a whole - not Doge specifically but my thoughts on Doge should be pretty clear.
c. I am trying to be objective here buy I'm currently short on BTC right now so watching out for my bearish bias.
Calculation:
Last price x circulating supply
Assumption:
CoinMarketcap says .. "Market Capitalization is one way to rank the relative size of a cryptocurrency"
Binance (academy) says.. "Crypto market capitalization is the current market value of a cryptocurrency network"
Great! so the market is growing and Doge on the way to the moon right?
-- What they are implying here is 'value'. I use this term in my day to day job when we are trying to create the illusion of real cash for clients but it doesn't really exist - that's marketing for you ;)
Breaking this down:
1. Supply:
When you see a youtuber talking about a skyrocketing market cap and institutions jumping in with wedges of cash this is not necessarily the truth. As author Anthony Back noted:
- If I launch a crypto with 10 billion circulating supply and one person pays $1 for one token you have a $10 billion market cap.. wait!! that person sold it for $2 and the Market Cap is now $20 billion!*
- This means with no regulation the market cap can scale without real money and only the introduction of new tokens/supply - think XRP.
* as more buyers come in they will establish an alternative price.
2. Circulation
- Calculations do not account for lost tokens - this would bring down the Market Cap - e.g. reduce BTC Market Cap by 20%
- creation of tokens out of thin air - this means you can boost market cap (unless the price adjusts but for many small tokens in a bull market this may be overlooked)
- the circulating supply doesn’t take into account illiquid coins or tokens in long-term storage
3. Value
- this is often quoted when talking about market cap but in crypto there is no value and Market Cap has nothing to do with value. We as humans keep things simple and misread this data value.
4. Comparison
- You are comparing nothing with nothing - there is no intrinsic value in the token thus an individual token market cap is based on sentiment vs another token sentiment
- they are designed for different use cases - thus you cannot compare ETH to BTC... unless they are just all in the speculating category which is probably the real truth
5. Price
- this is what the last person paid for a token - I can but a token at 10 times the current market price which would in effect 10x the market cap.
6. Tether
- a whole other topic
Conclusions and questions I'm asking myself thus far - (bearish bias coming through here)
---- Are market caps worth paying attention to - the market caps I see are pretty accurate in the way they are calculated but can be very misleading
---- In April total market cap dropped by 30% - if this was real cash then the market took out $700 billion almost overnight which is unlikely. The price just dropped to a point where people are willing to buy it again which established the market cap
---- if you can control price and supply then you can set the Market Cap? Seems that way - Some such as BTC would be harder to manipulate but there are 5,000 ALTs on Coinmarketcap with little regulation.
---- so the market is growing and Doge on the way to the moon right? Believe what you wish - I'm just suggesting that Market Cap looks misleading to me
---- is there really this amount of (real) money invested in the market? The answer seems to be ... NO! but I don't have enough knowledge to confirm this yet
---- If this is true about Market Cap, why would an institution invest in this space? I don't think they are.
---- When watching a youtuber talk about market cap going parabolic I must ask the question - do they really understand why this is happening?
-- There you have it - my basic research which may offer a new perspective or perhaps allow for further entrenchment into the Golden Chain that is crypto? Market Cap seems to make for nice charts but this may be why Doge coin can make the top 4 coins (based on Market Cap). The total market cap sits at $2.49T..
Take this with a pinch of salt and cynicism + perhaps in my limited research I have misrepresented Market Cap here so I suggest you take some time to research it if you are as unfamiliar as me.
Best, Hard Forky
"Market Cap means real money invested in the markets!" I heard a popular youtuber say..... Is this the riskiest assumption in crypto?
To understand this better I thought I would do a little digging - Disclaimer:
a. I'm just trying to get my head around this topic so no expert but the concept seems pretty simple.
b. I'm thinking about the market as a whole - not Doge specifically but my thoughts on Doge should be pretty clear.
c. I am trying to be objective here buy I'm currently short on BTC right now so watching out for my bearish bias.
Calculation:
Last price x circulating supply
Assumption:
CoinMarketcap says .. "Market Capitalization is one way to rank the relative size of a cryptocurrency"
Binance (academy) says.. "Crypto market capitalization is the current market value of a cryptocurrency network"
Great! so the market is growing and Doge on the way to the moon right?
-- What they are implying here is 'value'. I use this term in my day to day job when we are trying to create the illusion of real cash for clients but it doesn't really exist - that's marketing for you ;)
Breaking this down:
1. Supply:
When you see a youtuber talking about a skyrocketing market cap and institutions jumping in with wedges of cash this is not necessarily the truth. As author Anthony Back noted:
- If I launch a crypto with 10 billion circulating supply and one person pays $1 for one token you have a $10 billion market cap.. wait!! that person sold it for $2 and the Market Cap is now $20 billion!*
- This means with no regulation the market cap can scale without real money and only the introduction of new tokens/supply - think XRP.
* as more buyers come in they will establish an alternative price.
2. Circulation
- Calculations do not account for lost tokens - this would bring down the Market Cap - e.g. reduce BTC Market Cap by 20%
- creation of tokens out of thin air - this means you can boost market cap (unless the price adjusts but for many small tokens in a bull market this may be overlooked)
- the circulating supply doesn’t take into account illiquid coins or tokens in long-term storage
3. Value
- this is often quoted when talking about market cap but in crypto there is no value and Market Cap has nothing to do with value. We as humans keep things simple and misread this data value.
4. Comparison
- You are comparing nothing with nothing - there is no intrinsic value in the token thus an individual token market cap is based on sentiment vs another token sentiment
- they are designed for different use cases - thus you cannot compare ETH to BTC... unless they are just all in the speculating category which is probably the real truth
5. Price
- this is what the last person paid for a token - I can but a token at 10 times the current market price which would in effect 10x the market cap.
6. Tether
- a whole other topic
Conclusions and questions I'm asking myself thus far - (bearish bias coming through here)
---- Are market caps worth paying attention to - the market caps I see are pretty accurate in the way they are calculated but can be very misleading
---- In April total market cap dropped by 30% - if this was real cash then the market took out $700 billion almost overnight which is unlikely. The price just dropped to a point where people are willing to buy it again which established the market cap
---- if you can control price and supply then you can set the Market Cap? Seems that way - Some such as BTC would be harder to manipulate but there are 5,000 ALTs on Coinmarketcap with little regulation.
---- so the market is growing and Doge on the way to the moon right? Believe what you wish - I'm just suggesting that Market Cap looks misleading to me
---- is there really this amount of (real) money invested in the market? The answer seems to be ... NO! but I don't have enough knowledge to confirm this yet
---- If this is true about Market Cap, why would an institution invest in this space? I don't think they are.
---- When watching a youtuber talk about market cap going parabolic I must ask the question - do they really understand why this is happening?
-- There you have it - my basic research which may offer a new perspective or perhaps allow for further entrenchment into the Golden Chain that is crypto? Market Cap seems to make for nice charts but this may be why Doge coin can make the top 4 coins (based on Market Cap). The total market cap sits at $2.49T..
Take this with a pinch of salt and cynicism + perhaps in my limited research I have misrepresented Market Cap here so I suggest you take some time to research it if you are as unfamiliar as me.
Best, Hard Forky
Penafian
Maklumat dan penerbitan adalah tidak bertujuan, dan tidak membentuk, nasihat atau cadangan kewangan, pelaburan, dagangan atau jenis lain yang diberikan atau disahkan oleh TradingView. Baca lebih dalam Terma Penggunaan.
Penafian
Maklumat dan penerbitan adalah tidak bertujuan, dan tidak membentuk, nasihat atau cadangan kewangan, pelaburan, dagangan atau jenis lain yang diberikan atau disahkan oleh TradingView. Baca lebih dalam Terma Penggunaan.