[Manipulation 101] Market cap (to all who love repeating it these days)

[Pursuer]

I know right if right now you start to buy up every bitcoins available and are offered by traders, called accumulating as well, if current price is $1000 after successfully buying 20K bitcoins with a fixed $1000 per coin then you'll see how fast traders/sellers/holders increase their price which they're willing to sell, long story short if you try to accumulate half a million bitcoins in less than a month you'll end up with a $1150-$1250 averagely.
And from there every 100K coins you try to buy off from the community you can effectively pump the price starting from $1250 up to $1750 and before you could accumulate 1M BTC the price already reached $2500.
However right now only about 2K bitcoins are being mined but the trading volume is more than 150K, yes I know some of it are fake volume and most of it day traders changing hands but someone is slowly accumulating coins in bulks but very slowly to avoid pumping the price and pay more money.

in a market like bitcoin it doesn't matter what one person or couple of them do. it is the total that matters. there is 16.5 million coins available (ignoring the lose ones) and there are millions of people accumulating from 0.01BTC or less to 1000sBTC and the total of all these "supply and demand" has already created a market for 8 years and we can see how the price has changed over the years with the change in this "supply and demand".

Because if you try to buy 5M bitcoins in matter of a week the price will shoot up to $50,000 per coin, sorry to tell you that if you think $18B marketcap for BTC is not real I've got to tell you that it's true marketcap is way above $500B.

nobody said $X marketcap is not real, the topic is that marketcap is not a good factor to compare cryptocurrencies with each other or with other things.

Some people are too greedy with short term visions when it comes to trading their coins no one really should sell under $2000 now they don't get it maybe they're stupid or something, we only have access to roughly 2K bitcoins daily and I won't continue because I don't want to give away such opportunity for free but those with a bit of brain know what I'm talking about.

that is not called being greedy it is called being a day-trader as long as you buy the dips and sell the highs or in reverse to accumulate more bitcoin (sell the high and buy the dip).

[1714782392]

1714782392

[1714782392]

1714782392

[bobster]

I think it's a genuinely pathetic and shit metric, but it's hard to know what might replace it for simple reference. Perhaps some balance of trading volume vs supply but that still wouldn't be soundbitey enough for most people.

That's the problem. Market cap is a very oversimplified metric, but it's the best that is easy to calculate and understand. But with trade volume, we would have the same problem - a high value here can also indicate that a particular good/cryptocurrency is just used for speculation but nothing more.

A more complete evaluation of the potential of different cryptocurrencies is what the people at Coingecko tried, but it has its flaws, too; because for example the different coins have different development strategies. So the Coingecko value can be distorted by some minor metrics. It's still a very good complement to market cap if you want to evaluate a particular coin.

An alternative approach I would like to see realized would be the trading volume to goods and services instead of the trading volume to fiat currencies and cryptocurrencies. For example, one could try to aggregate the information of Bitpay-like payment processors (with CoinPayments in the case of altcoins), OpenBazaar-like decentralized markets and centralized e-commerce sites. That would indicate if a cryptocurrency is really used. And here, I think, Bitcoin would beat all competitors by a very high margin (I wouldn't be surprised if it's over 90 percent).

all of these factors, when considered individually, are bad and will even give the wrong idea in some cases. but when you have them all in your analysis then you can come up with a better conclusion.
- market cap
- trade volume and its change over time, for example is it temporary rise or has been up all year.
- price
- transaction number and volume
- services, merchants,...

Hi guys, Bobby here from CoinGecko. Interesting discussions here that you guys are having. I strongly agree that market cap is not the sole way to measure altcoins. There needs to be many other ways to look at these cryptocurrencies and that's what we attempted to do. Always looking for ways to improve things so yea do let us know if you have any. At the moment we take into account market cap, trading volume, development, community and public interest in evaluating cryptocurrencies and although it's not perfect, it does create a sort of alternative rank for consideration when trading any altcoins.

[deisik]

Because if you try to buy 5M bitcoins in matter of a week the price will shoot up to $50,000 per coin, sorry to tell you that if you think $18B marketcap for BTC is not real I've got to tell you that it's true marketcap is way above $500B.

nobody said $X marketcap is not real, the topic is that marketcap is not a good factor to compare cryptocurrencies with each other or with other things

I'd rather say that it won't be real altogether

Market cap, as it is calculated, assumes that it reflects the price of all coins issued (since mathematically, it is a product of multiplication of all coins issued by the price of just one coin). But it should be pretty obvious that economically it is meaningless, since we can't possibly claim that the price of only a part of total amount that gets traded should necessarily reflect the price which would result if all coins were traded. Basic economics clearly states that the more coins enter the market (i.e. the higher the supply), the lower will be the price. Hence, the market cap calculated on the price of only a part of all coins (and minor part at that) is meaningless if not outright deceiving. I don't really see how this point can be challenged in any plausible way

[Pursuer]

Hi guys, Bobby here from CoinGecko. Interesting discussions here that you guys are having. I strongly agree that market cap is not the sole way to measure altcoins. There needs to be many other ways to look at these cryptocurrencies and that's what we attempted to do. Always looking for ways to improve things so yea do let us know if you have any. At the moment we take into account market cap, trading volume, development, community and public interest in evaluating cryptocurrencies and although it's not perfect, it does create a sort of alternative rank for consideration when trading any altcoins.

yeah, I have seen your website before and I have to say it is so much better than coinmarketcap in many aspects.
I specifically like the Developers and Community columns.
also I would suggest that in liquidity column, it is best if the average trading volume in longer period such as a week or better in a month is considered instead of only past 24 hours. coins that are being pumped or dumped will always have a huge volume that is also temporary. but in long term it will be more realistic.

also I would suggest Number of transactions (again on average per long term) and also number of services in real world that are accepting these as real currency (this last one is going to be hard though).

[Pursuer]

as I said in my example in OP an altcoin can easily create coins out of nowhere! there is nothing stopping them and it is just supply and doesn't even have to be on the market to change anything such as creating sell pressure.

here is very good example of why Market capitalization is not such a good factor for comparing cryptocurrencies when it comes to altcoins like this. when a coin like this can easily reach the third rank with a simple pump to 14000 satoshi!


source: https://bitcointalk.org/index.php?topic=1780445.0

[ðºÞæ]

The oldest coin to survive purely on marketcap figures is Ripples xrp token. Most of the "circulating Supply" is not freely available to trade as the free gifted tokens to banks or partners are locked by contractual agreement.

Can someone explain how the circulating supply decreases from time to time? WTF
(Now 18 June 2017 "available" 38,290,271,363 XRP )

[Pearls Before Swine]

Yes, the market cap doesnot reveal the true market value of the coin.

I had to lol at this.  People just want to crank out the bullshit as hard and fast as they can..and you end up with gems like this statement.   I agree with OP and I think most users here are financially illiterate.   Not all, but many.  And people parrot the phrases they hear, like all the TA garbage.  It's sickening.

[dothebeats]

Any dev can create a new coin and pump the hell out of it to reach the higher tier of market cap. It is never a good thing to base a coin of how good it is by just looking at market cap. Numbers matter, yes,  but numbers alone don't define a coin's true value. If I know how to create a coin right now, I can artificially increase its value for a short time and see it hanging in coinmarketcap.com even though it's a complete bs coin.

[cellard]

The premined coins that list a ton of coins at the same time get on the marketcap webpage on top of other better coins and it's unfortunate to see how newbies think they are better coins when they have no real value proposition at all, more smoke and mirrors while smaller teams struggle to keep in the first page because the didn't raise millions on ICOs and whatnot.

[Pursuer]

The oldest coin to survive purely on marketcap figures is Ripples xrp token. Most of the "circulating Supply" is not freely available to trade as the free gifted tokens to banks or partners are locked by contractual agreement.

what you call surviving is not really surviving, it is more of just existing like how all the rest of the altcoins have been doing. even coins like Bunnycoin that is worth less than 1 satoshi LOL. also this chart is only worth if you add the price on top of it. price that was 1400 satoshi last June and went down to 400 satoshi, and again like all the other altcoins it was pumped up to 24K

and what you just said is my whole point. the circulating supply is not even 1/100 of what we see!

Can someone explain how the circulating supply decreases from time to time? WTF
(Now 18 June 2017 "available" 38,290,271,363 XRP )

I think they said multiple times that they will "lock" some part of the supply in escrow or something, or maybe some of these dips are from burnt coins or something. but I am not sure.

[ðºÞæ]

Here is the whole ugly XRP scene. In August 2014 when 1/5 of total xrp became "available" neither price or volume changed. The whole point of it was to move up Marketcap, which still is totally fake.
Price is a Number Ripple chooses to dump on ill-informed.
Imagine releasing over 4 million Bitcoin on a single day.

[arpon11]

I have also been seeing how people have been misunderstood market capitalization of an assets especially crytocurrency like Ethereum and even the great bitcoin! What I was tough in economic class was market capitalization is the values of asset supply multiplied it currently market prices.