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Author Topic: Market Cap, newb question  (Read 1171 times)
Leelue
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June 08, 2017, 02:50:30 AM
 #1

Why is it that when people compare coins, they bring up what the "market cap" would have to be in order to project a price? Why does this matter, if it's just coin price x number of coins?

Why would one coin not be able to achieve a particular market cap?
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June 08, 2017, 06:51:24 AM
 #2

Market cap is a measure of adoption that is comparable across all currencies.

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June 08, 2017, 06:56:15 AM
 #3

Why is it that when people compare coins, they bring up what the "market cap" would have to be in order to project a price? Why does this matter, if it's just coin price x number of coins?

Why would one coin not be able to achieve a particular market cap?

Marketcap is a marketing trick. Some coins  on coinmarketcap.com ain't what they appear to be. If i create an altcoin myself, premine it %99 and sell only 1 share for 500k$, its market cap instantly becomes 500k$xMy coin's supply.

Coinmarketcap is not stupid and eliminates those scams but some coin owners are actually smarter than anybody and can hide their real value by using more complicated variations of this method.

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June 08, 2017, 07:08:17 AM
 #4

Why is it that when people compare coins, they bring up what the "market cap" would have to be in order to project a price? Why does this matter, if it's just coin price x number of coins?

Why would one coin not be able to achieve a particular market cap?

That's mostly useless metric

You feel as if it is telling you something but it isn't. It is a sort of optical illusion which makes you believe in something which is not really there. And it becomes particularly misleading and deceiving when people start drawing conclusions on its basis. For example, when Bitcoin recently flash crashed to below 2,000 dollars per coin, its market cap diminished by 4B dollars, and some people here seriously believed that these monies were real, as if literally 4 billion dollars had been withdrawn from Bitcoin. This example shows it pretty unambiguously how fake is this metric

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June 08, 2017, 12:59:28 PM
 #5

Why is it that when people compare coins, they bring up what the "market cap" would have to be in order to project a price? Why does this matter, if it's just coin price x number of coins?

Why would one coin not be able to achieve a particular market cap?

That's mostly useless metric

You feel as if it is telling you something but it isn't. It is a sort of optical illusion which makes you believe in something which is not really there. And it becomes particularly misleading and deceiving when people start drawing conclusions on its basis. For example, when Bitcoin recently flash crashed to below 2,000 dollars per coin, its market cap diminished by 4B dollars, and some people here seriously believed that these monies were real, as if literally 4 billion dollars had been withdrawn from Bitcoin. This example shows it pretty unambiguously how fake is this metric

It's not fake or useless, you just need to understand how to relate it.
obviously you can't base your investment on that parameter alone, but you can use it with others.
with new coins and small amounts it might be misleading,
but when going to big numbers over serious amount of time it is much more transparent.
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June 08, 2017, 01:02:53 PM
 #6

People use it because it's easy to game and inflate and it supplies large numbers that make you look cool.

Other than that it's misleading junk that's best forgotten about.

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June 08, 2017, 01:21:55 PM
 #7

Why is it that when people compare coins, they bring up what the "market cap" would have to be in order to project a price? Why does this matter, if it's just coin price x number of coins?

Why would one coin not be able to achieve a particular market cap?
in fact, if the market cap can't be determined as an important factor to compare the coin against another coin.

Try to take a look on the gnosis and his market cap is ridiculous in my opinion. The marketcap full with manipulation.

It's not good in my opinion.

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June 08, 2017, 01:25:22 PM
 #8

Why is it that when people compare coins, they bring up what the "market cap" would have to be in order to project a price? Why does this matter, if it's just coin price x number of coins?

Why would one coin not be able to achieve a particular market cap?

That's mostly useless metric

You feel as if it is telling you something but it isn't. It is a sort of optical illusion which makes you believe in something which is not really there. And it becomes particularly misleading and deceiving when people start drawing conclusions on its basis. For example, when Bitcoin recently flash crashed to below 2,000 dollars per coin, its market cap diminished by 4B dollars, and some people here seriously believed that these monies were real, as if literally 4 billion dollars had been withdrawn from Bitcoin. This example shows it pretty unambiguously how fake is this metric

It's not fake or useless, you just need to understand how to relate it

Okay, now you may want to tell me how it is useful

If it is not useless, according to you, then it should be useful, right? Unless you mean being useful in confusing or astonishing someone with 40B dollar Bitcoin market cap, of course. It is useless even if you compare market caps of different currencies since this is certainly not the case when two useless things may turn somehow useful if combined. In fact, such comparisons would only produce twice as useless (or useless squared) results

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June 08, 2017, 02:21:08 PM
 #9

I agree with mindtrust.  Market Cap is there to create illusion about the market size of a coin.  It is flawed representation that does not tell the actual market capitalization of a coin.  It just get the present price of a coin and then multiply it to the total coins then declaring the Market cap.  I agree with deisik that it is useless since it does not tell us the accurate market capitalization of a certain subject.

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June 08, 2017, 03:06:48 PM
 #10

The market capitalization of the company consists of cost of hardware products and so on. the Market capitalization of the currency, then temporary factor which does not mean anything. Tomorrow, the currency will lose credibility and market capitalization for a few days will be zero.

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Leelue
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June 08, 2017, 03:37:18 PM
 #11


Okay, now you may want to tell me how it is useful


I had a vague feeling that it was basically smoke and jargon, but as a newb I couldn't just go around accusing people of just saying buzzwords.
So yea, to people who think it is useful, please explain how
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June 08, 2017, 03:47:03 PM
 #12

Why is it that when people compare coins, they bring up what the "market cap" would have to be in order to project a price? Why does this matter, if it's just coin price x number of coins?

Why would one coin not be able to achieve a particular market cap?

Yes,  you are right. In case of cryptocurrencies, market cap simply implies present price x total coins in supply. So it is just estimated figure and doesn't belongs to positive economics just normative one. As all coins in market are not bought and sold at that price.
But in real world, market cap is very important word and refers to value of total assets owned by company.

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June 08, 2017, 03:49:15 PM
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The higher is market cap - the stronger the coin. Coins with small market caps are easy to manipulate.

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June 08, 2017, 04:47:44 PM
 #14

Actually marketcap could say something useful only if coin wasn't pre-mined (most of coins holded by tiny group of people) or
like Ripple was't just created (with a bit sharing with bitcointalk users).
If most of the coins are not used anywhere, and only a small part of it is traded at an (arbitrarily) attractive price -
the value of market capitalization is not indicative and could only confuses people.

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June 09, 2017, 02:22:08 AM
 #15

Why is it that when people compare coins, they bring up what the "market cap" would have to be in order to project a price? Why does this matter, if it's just coin price x number of coins?

Why would one coin not be able to achieve a particular market cap?

It is a predictor of usage utility and future value, not to say that bubbles can't happen at any time but as a whole it is usually a good sign and measures the health of the ecosystem as a whole, recently the value of all altcoins measured on coinmarket cap passed 100 Billion dollars and is now 102 Billion dollars so a market cap based on the sphere gives context to the wealth creation that exists in the market.
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June 09, 2017, 05:38:31 AM
 #16

Why is it that when people compare coins, they bring up what the "market cap" would have to be in order to project a price? Why does this matter, if it's just coin price x number of coins?

Why would one coin not be able to achieve a particular market cap?

It is a predictor of usage utility and future value
, not to say that bubbles can't happen at any time but as a whole it is usually a good sign and measures the health of the ecosystem as a whole, recently the value of all altcoins measured on coinmarket cap passed 100 Billion dollars and is now 102 Billion dollars so a market cap based on the sphere gives context to the wealth creation that exists in the market

How's that really?

And why only 100 billion and not 500 billion, given the "context to the wealth creation that exists in the market"? If Bitcoin market cap has, say, 40B dollars while only around 1M coins get actively traded today, do you really expect it to rise (i.e. price to rise) if all of them start being traded or circulated since that's basically what market cap assumes (i.e. that all coins are circulating)? I guess if supply of coins increases just 2 times (from 1M to measly 2M coins), the price (and consequently, market cap) might easily crash even more than 2 times (e.g. due to panic selloffs). Now think if it is in fact "a predictor of usage utility and future value". The number of coins can be loosely considered that, but you can't possibly predict what their average price would be

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June 09, 2017, 06:46:14 AM
 #17

Market capitalization is a one good factor about the coin. If there it has a bigger value,the percentage in 24 hours etc, we will have an idea whats  happening in a coin.Bigger trader volume also means more people are trading or some whales are manipulating it. Smiley It gives as an idea about market acceptance also IMHO.

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June 09, 2017, 07:53:58 AM
 #18

Market cap function to see the development of coin at a time. What percentage of coins are in the hands of buyers and dev. It is important to examine when the coin rises and falls.
This is just an insignificant analysis and I am still learning. Cheesy

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June 09, 2017, 09:06:51 AM
 #19

Why is it that when people compare coins, they bring up what the "market cap" would have to be in order to project a price? Why does this matter, if it's just coin price x number of coins?

Why would one coin not be able to achieve a particular market cap?

Marketcap helps to compare how much fiat was invested in some coin. Although you shouldn't think that if Bitcoins marketcap is 46 billions USD, then people literally exchanged 46 billions USD for all the Bitcoins. It only means that Bitcoins were exchanged for more fiat than other coins.

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June 09, 2017, 09:13:19 AM
 #20

Although marketcap is an indication of the total value of a crypto you still have to look at other factors. Try averaging the daily trade volume. The higher it is the more likely it is that people are invested in that coin for the long run. Look at coinmarketcap.com. Besides for the day traders (pumping and dumping coins) the top coins always have the biggest trade volume. It's an obvious indicator but shouldn't be overlooked.
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