Crypto market cap doesn't need new money to moon

[insculpt]

It is true that a lot of people got into the crypto space in the months of November & December 2018. It's true that if more people get involved in crypto, the average prices of crypto coins will go up. Why? economics, demand, and supply. The majority of the coins have a limited supply and the higher the demand for those coins/tokens, the higher the chance for the prices to go up. However, the most interesting thing in crypto is that no new money needs to actually come into the markets to push the prices up, and the opposite is also true.

In general, crypto markets are driven by speculation. This can be either good or bad depending on the perspective. It is good for the hodler when speculation drives the prices up because they become richer without having to buy more. It is bad in the sense that negative news can easily cause markets to crash and cause massive losses for those who bought at ATH as seen in the recent crash that saw most coins lose up to 90% in a couple of weeks.

As we stand right now, the total market cap is $426 billion, almost 50% lower than the ATH! It is also true that a lot of weak hands did exit crypto holdings during the crash. But that does not need to have been the case. The price of a coin can go up or down even if just a penny changing hands. Huh! Yes, just one penny is needed to drive the price up or down. The other factor, the biggest factor, is the opinions of the crowds. When the outlook is positive, and things are looking promising for a coin. Say, they are launching that feature that everyone has been waiting for according to the roadmap, people can start placing higher buy orders. The sellers seeing the action, decide to cancel their lower sell orders and place higher sell orders and the race up goes on and on. This can go on and on and as long as no orders are filled, the price remains the same on CMC, right! The price will only change when a sell order or buy order is filled. That buy order can be only 1 penny! and the price could have gone up 20% with just that one penny. Did new money come in? Maybe, but was it the new money that drove the price up? Not necessarily and probably not. Do you get the picture? Prices can go up 20, 50 or 70% with only a penny exchanging hands and the opposite is also true. So what drives the prices up or down? Opinions, not new money. Money doesn't have to leave the market for prices to crash. It can all happen with the smallest amount of a sell order being filled. The same money could remain in the market, and the prices could be down.

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[hs84]

Absolutly true.
But then we are in fully speculation!
I am always paying out time per time,... to take a little of my winnings.
After Crash i am always happy because i am having some fiat money to invest again.
but in an rising market i am "loosing" money because not all my money is going to rise.

cant tell you what is right thing to do.
but you thoughts and how it works are true!
(thats why penny stocks with almost no trading volume can rise that much or loosing that much )

thats the game we are playing

[Diffy]

Sure, the market cap could go up like that but it could as easily go down too. Shows how little importance mk cap has right now. The daily trading volume is much more important right now and we need new money if we want cryptocurrencies to grow.

[hs84]

you always have to thing about that there is just 1/2 of the supply which is moving atm.
just a number,...
so if there would be all the supply out with your theorie,...
then every coin is at least less than the half worth which you are holding now.
keep that in mind

[kryptqnick]

It's true that if more people get involved in crypto, the average prices of crypto coins will go up. Why? economics, demand, and supply. The majority of the coins have a limited supply and the higher the demand for those coins/tokens, the higher the chance for the prices to go up.

In general, crypto markets are driven by speculation.

The price of a coin can go up or down even if just a penny changing hands.
The price will only change when a sell order or buy order is filled. That buy order can be only 1 penny!
So what drives the prices up or down? Opinions, not new money. Money doesn't have to leave the market for prices to crash.

It is hard to get your point. You're saying that money is not needed for prices to go up or down. You maintain that very small amounts of money put and filled in buy'sell order can make a huge difference. But is it really true? First, transaction fees for some coins, as well as additional fees on some markets make the min limit of the money with which you can create an order, so it's definitely not 1 penny. But okay, let's neglect this aspect and concentrate on more important things. Let's say I hear bad news about ethereum and set a buy order for $500 on a sum of 10 dollars. Suppose, even a group of people does that. But, as the order sums are low, even if they do get filled somehow, it would not affect the price a lot (only if we deal with  a market that has a very low trading volume of the coin), since most of the money invested into ethereum is still there and the main price is still the normal one.
Even if you can have good results with low funds, they still have to be wagered a lot. I mean, a lot of orders have to be filled on certain prices to make a difference.

[insculpt]

It's true that if more people get involved in crypto, the average prices of crypto coins will go up. Why? economics, demand, and supply. The majority of the coins have a limited supply and the higher the demand for those coins/tokens, the higher the chance for the prices to go up.

In general, crypto markets are driven by speculation.

The price of a coin can go up or down even if just a penny changing hands.
The price will only change when a sell order or buy order is filled. That buy order can be only 1 penny!
So what drives the prices up or down? Opinions, not new money. Money doesn't have to leave the market for prices to crash.

It is hard to get your point. You're saying that money is not needed for prices to go up or down. You maintain that very small amounts of money put and filled in buy'sell order can make a huge difference. But is it really true? First, transaction fees for some coins, as well as additional fees on some markets make the min limit of the money with which you can create an order, so it's definitely not 1 penny. But okay, let's neglect this aspect and concentrate on more important things. Let's say I hear bad news about ethereum and set a buy order for $500 on a sum of 10 dollars. Suppose, even a group of people does that. But, as the order sums are low, even if they do get filled somehow, it would not affect the price a lot (only if we deal with  a market that has a very low trading volume of the coin), since most of the money invested into ethereum is still there and the main price is still the normal one.
Even if you can have good results with low funds, they still have to be wagered a lot. I mean, a lot of orders have to be filled at certain prices to make a difference.

My point is clear, let's use another example, one which you might have heard about. Bitconnect, or most recently Davor, when they closed their lending programs, that's terrible news, suddenly all the buy orders that were pending are cancelled, the sellers start placing lower buy orders, trying to outsell each other, suddenly the highest sell order is $25 down from $400 and so far no order has been filled and therefore the price remains the same. Say one person believes $25 is a good buy and he buys Bitconnect worth a penny. The price on the exchange now records because that was the last order filled. Did the amount of money pumped into the market previously get taken out? Certainly not, yet the price is now $25! So my point is that it's not really the amount of money pumped into crypto that necessarily drives the prices up. It will initially do so while people are buying, but the moment bad news is heard, the money that was initially put in, could still be in the market, yet the market cap can drop below that value. Say a trillion dollars gets injected into crypto today, and the market cap rises, tomorrow news that the US has banned crypto spreads, the market cap can drop to two hundred billion without  $100 leaving the market. If this does not make my point clear, I rest my case.

[Poink]

My point is clear, let's use another example, one which you might have heard about. Bitconnect, or most recently Davor, when they closed their lending programs, that's terrible news, suddenly all the buy orders that were pending are cancelled, the sellers start placing lower buy orders, trying to outsell each other, suddenly the highest sell order is $25 down from $400 and so far no order has been filled and therefore the price remains the same. Say one person believes $25 is a good buy and he buys Bitconnect worth a penny. The price on the exchange now records because that was the last order filled. Did the amount of money pumped into the market previously get taken out? Certainly not, yet the price is now $25! So my point is that it's not really the amount of money pumped into crypto that necessarily drives the prices up. It will initially do so while people are buying, but the moment bad news is heard, the money that was initially put in, could still be in the market, yet the market cap can drop below that value. Say a trillion dollars gets injected into crypto today, and the market cap rises, tomorrow news that the US has banned crypto spreads, the market cap can drop to two hundred billion without  $100 leaving the market. If this does not make my point clear, I rest my case.

Let me help you with a simpler example.  Say the entire marker is only held by 2 investors...

InvestorA own 10 billion of crypto coinA he bought at $0.01 each.
InvestorB own 10 billion of crypto coinB he bought at $0.01 each.

Both invested $100million for a total market cap of $200 million

If investorA sold one token to investorB for $1, and likewise investorB sold investorA one of his token for $1.  At that instant, the market cap went up to $20 billion with only a dollar injected to the market.

[hypcoin]

Thanks op for holding this in front of our eyes again. I agree with you because logically not all the money is burned, only when you sell.

[insculpt]

My point is clear, let's use another example, one which you might have heard about. Bitconnect, or most recently Davor, when they closed their lending programs, that's terrible news, suddenly all the buy orders that were pending are cancelled, the sellers start placing lower buy orders, trying to outsell each other, suddenly the highest sell order is $25 down from $400 and so far no order has been filled and therefore the price remains the same. Say one person believes $25 is a good buy and he buys Bitconnect worth a penny. The price on the exchange now records because that was the last order filled. Did the amount of money pumped into the market previously get taken out? Certainly not, yet the price is now $25! So my point is that it's not really the amount of money pumped into crypto that necessarily drives the prices up. It will initially do so while people are buying, but the moment bad news is heard, the money that was initially put in, could still be in the market, yet the market cap can drop below that value. Say a trillion dollars gets injected into crypto today, and the market cap rises, tomorrow news that the US has banned crypto spreads, the market cap can drop to two hundred billion without  $100 leaving the market. If this does not make my point clear, I rest my case.

Let me help you with a simpler example.  Say the entire marker is only held by 2 investors...

InvestorA own 10 billion of crypto coinA he bought at $0.01 each.
InvestorB own 10 billion of crypto coinB he bought at $0.01 each.

Both invested $100million for a total market cap of $200 million

If investorA sold one token to investorB for $1, and likewise investorB sold investorA one of his token for $1.  At that instant, the market cap went up to $20 billion with only a dollar injected to the market.

  Give this man a Bell's

[Savik]

My point is clear, let's use another example, one which you might have heard about. Bitconnect, or most recently Davor, when they closed their lending programs, that's terrible news, suddenly all the buy orders that were pending are cancelled, the sellers start placing lower buy orders, trying to outsell each other, suddenly the highest sell order is $25 down from $400 and so far no order has been filled and therefore the price remains the same. Say one person believes $25 is a good buy and he buys Bitconnect worth a penny. The price on the exchange now records because that was the last order filled. Did the amount of money pumped into the market previously get taken out? Certainly not, yet the price is now $25! So my point is that it's not really the amount of money pumped into crypto that necessarily drives the prices up. It will initially do so while people are buying, but the moment bad news is heard, the money that was initially put in, could still be in the market, yet the market cap can drop below that value. Say a trillion dollars gets injected into crypto today, and the market cap rises, tomorrow news that the US has banned crypto spreads, the market cap can drop to two hundred billion without  $100 leaving the market. If this does not make my point clear, I rest my case.

Let me help you with a simpler example.  Say the entire marker is only held by 2 investors...

InvestorA own 10 billion of crypto coinA he bought at $0.01 each.
InvestorB own 10 billion of crypto coinB he bought at $0.01 each.

Both invested $100million for a total market cap of $200 million

If investorA sold one token to investorB for $1, and likewise investorB sold investorA one of his token for $1.  At that instant, the market cap went up to $20 billion with only a dollar injected to the market.

Absolutely correct and it would be interesting to know how much supply of a given coin is actually moving in a day.

Also shines a light on the term Market Capitalization and is it really a good measure of value (yes, I know it is widely accepted in all financial markets around the world, but still)?

[MairaObergh]

You're absolutely right OP. Though new money does = hype. But overall it still all true. New money indirectly helps the price moon, by the hype, volume, etc. So many different factors.

[JetSet11]

I think that most people are investing their money with the belief that the market will be flooded with new money. I expect the total market cap to be $1-2 trillion by year's end.

[dealung]

After several times reading your opinion, the end I understand. I think what you say makes perfect sense, the market can change just because of one transaction, whether up or down.

Do you think of all the events that have happened yesterday, is there a market opportunity can be controlled by a person or a big company?

[ahmed]

I think crypto currency will rise if bitcoin price rises because bitcoin is the most influential crypto currency in crypto world. if the bitcoin price goes down of course our assets will go down as well. and I am also interested in your explanation above.

[sweerty1]

Well this post is true. But it sadly confesses that we reached phase that crypto coins worth nothing and price is only driven by speculation. That is generally bad, as cryptos try to prove themselves as alt economy. You cant be alt economy with altcoins if prices don't reflect reality.

[miningguru]

I think that most people are investing their money with the belief that the market will be flooded with new money. I expect the total market cap to be $1-2 trillion by year's end.

We are expecting more than 1 trillion by the end of the year because with news all countries governments are giving people are showing a lot of interest towards the cryptocurrencies this might increase the market value in coming days.