02-04-2021, 07:44 PM
Understanding market cap, circulating supply, max supply and why the price of a coin
<!-- SC_OFF --><div class="md"><p>Hello everyone! </p> <p>I've realized that a lot of people, specially new ones in this community don't really have a lot of knowledge about these terms and what each of them mean, so I decided to try to make everything clear so that people don't expect completely unrealistic things(like doge is going to reach 1000 USD)</p> <p>So first things first what does each of those words you find in websites like coinmarketcap and coin gecko mean? Let's understand one by one:</p> <p><strong>VALUE</strong></p> <p>The value of a coin is the last price someone paid for that coin, note that it doesn't need to be a "whole" coin you can buy 0.0001 coin but the value is always stated as a whole coin. </p> <p>EXAMPLE: 1 BTC = 37.791 USD this is how much the last BTC transaction cost to the buyer corrected for 1 BTC. ( So if he bought 0.1 BTC he paid 3.7791 USD)</p> <p><strong>CIRCULATING SUPPLY</strong></p> <p>This is the amount of a coin that can be exchanged at the moment.</p> <p>EXAMPLES: </p> <p>BTC = 18,618,562 ETH = 114,525,091</p> <p>Note that BTC circulating supply is way lower then ETH which means there is less bitcoin in existence now than there is Ethereum(this is very important)</p> <p><strong>TOTAL SUPPLY</strong> </p> <p>Total supply is the amount of a coin that can be exchanged + the amount that is locked(but already exists). NOT the amount that will be available in the future.</p> <p><strong>MAX SUPPLY</strong> </p> <p>This is the total amount of a coin that will ever exist.</p> <p>NOTE: some coins DON'T have a max supply as there will always be new coins generated. Ex:. Dogecoin</p> <p><strong>MARKET CAP</strong> Market cap is a simple multiplication of the value of a coin with its circulating supply</p> <p>Example: BTC: 37,791 USD x 18,618,562 = 703614076542</p> <p>As you probably already know Bitcoin is the number one Cryptocurrency in existence today and that is NOT because it has the highest value, but because it has the highest market cap.</p> <p>That is why 62% of the crypto value is in BTC, because that's the amount of money that is invest in that coin considering the amount of coins in existence.</p> <p>so for Ethereum to surpass bitcoin its value DOESNT need to go 40k it needs to go to 6143 (at the current supply)</p> <p>Just so you guys understand how absurd is the idea of doge reaching 100 USD, were that to happen at the current circulating supply (note that doge supply is always increasing quite faster then BTC and ETH) it would have a market cap of 12.8 trillion dollars which is 12 times more than all money invested in all cryptocurrencies at the moment. Oh but how about 1 dollar? Then it would be 128 billion.</p> <p><strong>Conclusion</strong> </p> <p>DON'T BUY A COIN BECAUSE THE VALUE IS LOW, check the market cap for growth but also check the technology and how other people might be interested in buying that coin as well.</p> <p><strong>Edit</strong></p> <p>Miscalculated doge ?</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Pdvsky"> /u/Pdvsky </a> <br/> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/lc32m7/understanding_market_cap_circulating_supply_max/">[link]</a></span> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/lc32m7/understanding_market_cap_circulating_supply_max/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>Hello everyone! </p> <p>I've realized that a lot of people, specially new ones in this community don't really have a lot of knowledge about these terms and what each of them mean, so I decided to try to make everything clear so that people don't expect completely unrealistic things(like doge is going to reach 1000 USD)</p> <p>So first things first what does each of those words you find in websites like coinmarketcap and coin gecko mean? Let's understand one by one:</p> <p><strong>VALUE</strong></p> <p>The value of a coin is the last price someone paid for that coin, note that it doesn't need to be a "whole" coin you can buy 0.0001 coin but the value is always stated as a whole coin. </p> <p>EXAMPLE: 1 BTC = 37.791 USD this is how much the last BTC transaction cost to the buyer corrected for 1 BTC. ( So if he bought 0.1 BTC he paid 3.7791 USD)</p> <p><strong>CIRCULATING SUPPLY</strong></p> <p>This is the amount of a coin that can be exchanged at the moment.</p> <p>EXAMPLES: </p> <p>BTC = 18,618,562 ETH = 114,525,091</p> <p>Note that BTC circulating supply is way lower then ETH which means there is less bitcoin in existence now than there is Ethereum(this is very important)</p> <p><strong>TOTAL SUPPLY</strong> </p> <p>Total supply is the amount of a coin that can be exchanged + the amount that is locked(but already exists). NOT the amount that will be available in the future.</p> <p><strong>MAX SUPPLY</strong> </p> <p>This is the total amount of a coin that will ever exist.</p> <p>NOTE: some coins DON'T have a max supply as there will always be new coins generated. Ex:. Dogecoin</p> <p><strong>MARKET CAP</strong> Market cap is a simple multiplication of the value of a coin with its circulating supply</p> <p>Example: BTC: 37,791 USD x 18,618,562 = 703614076542</p> <p>As you probably already know Bitcoin is the number one Cryptocurrency in existence today and that is NOT because it has the highest value, but because it has the highest market cap.</p> <p>That is why 62% of the crypto value is in BTC, because that's the amount of money that is invest in that coin considering the amount of coins in existence.</p> <p>so for Ethereum to surpass bitcoin its value DOESNT need to go 40k it needs to go to 6143 (at the current supply)</p> <p>Just so you guys understand how absurd is the idea of doge reaching 100 USD, were that to happen at the current circulating supply (note that doge supply is always increasing quite faster then BTC and ETH) it would have a market cap of 12.8 trillion dollars which is 12 times more than all money invested in all cryptocurrencies at the moment. Oh but how about 1 dollar? Then it would be 128 billion.</p> <p><strong>Conclusion</strong> </p> <p>DON'T BUY A COIN BECAUSE THE VALUE IS LOW, check the market cap for growth but also check the technology and how other people might be interested in buying that coin as well.</p> <p><strong>Edit</strong></p> <p>Miscalculated doge ?</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Pdvsky"> /u/Pdvsky </a> <br/> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/lc32m7/understanding_market_cap_circulating_supply_max/">[link]</a></span> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/lc32m7/understanding_market_cap_circulating_supply_max/">[comments]</a></span>Kind Regards R