![]() Market cap only reflects the last transaction price multiplied by the circulating supply. The market cap of a cryptocurrency or token is about price, not value, which misleads many investors. Market cap only reflects the last transaction price It’s just a multiplication of the last transaction price by the circulating supply, and, therefore, has no use when trying to assess value. Market cap is about price, and the price has NOTHING to do with value. As the market cap skyrockets, more sheep mistakenly believe the asset to have increasing value, and the cycle continues. In the vast majority of cases, no underlying value was added to these assets, just more sheep willing to pay higher prices, which resulted in the market cap skyrocketing. But what actually changed? Did they get more users, launch a new technology, or achieve more mainstream adoption? What change/s occurred to the underlying fundamentals?Īll that happened was more investors were willing to pay a higher price. Sometimes overnight, Bitcoin or Ethereum has added billions to its market cap. Think about the gains experienced by crypto assets in the last few years. Assuming that whatever the market is willing to charge for an asset is equal to what it’s worth is a big mistake. It’s an indication of what people are paying for something, and this is usually driven by irrational sentiment, which has little connection to an asset’s real value. Price is what you pay for a coin or token, it has nothing to do with what you actually get aka value. This is a fundamental distinction that is often overlooked. It does not reflect the value of the company or crypto asset you’re investing in. If you understand what something is worth (its value), it’s possible to judge whether an investment is over or underpriced. It’s essential to find out what a company or asset you are investing in is worth when making an investment. However, the real question is, what can it be used for? What does it mean? The Answer, ABSOLUTELY NOTHING. It’s a simple calculation, which is perhaps why it’s so widely used. It’s a widely used metric for measuring the size and value of a cryptocurrency or token network. Market cap or market capitalization is calculated by multiplying the circulating supply of a cryptocurrency or token by its last transaction price. How is market cap calculated for cryptocurrencies and tokens? It also speaks to the greed of some investors who use it cynically and the media’s insatiable appetite for sensationalist headlines. Most investors require a simple way of finding an answer to what is a very complex subject - the value of a network. The continued proliferation of the term speaks to a reality of investor laziness. It’s downright dangerous because it misleads investors and plays a role in the crypto panics and wild swings that so often impact the space. Market cap is meaningless, easily manipulated, and creates a false sense of value. It’s used everywhere as a justification for investment decisions and a metric to measure the size and value of a cryptocurrency or token. Market cap or market capitalization is a calculation that emerged from traditional finance but one that has also seeped into the crypto world. In some cases driven by cynical greed and almost always by a sheep-like mentality and sublime inability to question established concepts, investors, both newbies and even those considered “astute” with millions of followers and dollars under management, have been reduced to delusion on an industrial scale. Much like the traditional stock market, the crypto asset market overflows with people who invest money in a state of mind-boggling ignorance. ![]() You hereby agree that we are not providing our own opinions, advice, or recommendations.Despite its foolishness there for all to see, market cap is blindly used by the masses and even experienced investors who should know better. While we endeavor to publish and maintain accurate information on external listings, we do not guarantee the accuracy, completeness, or usefulness of any information on this site, nor do we adopt nor endorse, nor are we responsible for, the accuracy or reliability of any information submitted by other parties. The brands and the logos appearing on this website are registered trademarks by their respective brand owners. may not offer certain products, features and/or services on the App in certain jurisdictions due to potential or actual regulatory restrictions. Please note that the availability of the products and services on the App is subject to jurisdictional limitations. You may obtain access to such products and services on the App. It is not intended to offer access to any of such products and services. The purpose of this website is solely to display information regarding the products and services available on the App.
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