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Author Topic: Cryptocurrencie's market cap's are nonsense  (Read 110 times)
cryptovinz
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September 04, 2018, 11:45:37 AM
Merited by 1Referee (1), reactorjuno (1)
 #1

Hi guys,
i just wrote an article about cryptocurrencie's market cap's. To my mind there are major errors and on top i think market caps as an indicator for crypto doesn't make any sense at all.
excited for some thoughts and feedback! Wink


https://medium.com/@cryptovinz/cryptonomics-1-cryptocurrencies-market-cap-s-are-nonsense-2225362cddc9
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RodeoX
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September 04, 2018, 11:56:47 AM
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I'll have to read your article later, but I agree.

A scammer creates 1 CrapCoin and puts it up for sale on an exchange then his buddy buys the coin for $10. Since there are 1 million "craps" in the total supply, the market cap is 10 million dollars. Now tomorrow he will sell it back to the scammer for $15. Now he can claim that his market cap is 15 million and the coin has experienced 50% growth!!!

It's all true, but...

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bob123
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September 04, 2018, 12:10:50 PM
 #3

This is a nice article.

And it should give new users enough insight into why market cap is not enough to evaluate an investment / crypto.

A lot of new comer are surfing on reddit and after reading 2 or 3 shitty posts/articles they feel like they have mastered the whole crypto space already.
Valuing crypto's by market cap only is retarded.

A lot of factors (should) influence the rating of an investment, but unfortunately most people simply get grabbed by some nice looking video / website and a few other subsidiary things.

reactorjuno
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September 04, 2018, 12:18:24 PM
 #4

Hi guys,
i just wrote an article about cryptocurrencie's market cap's. To my mind there are major errors and on top i think market caps as an indicator for crypto doesn't make any sense at all.
excited for some thoughts and feedback! Wink


https://medium.com/@cryptovinz/cryptonomics-1-cryptocurrencies-market-cap-s-are-nonsense-2225362cddc9
Welcome to the forum Vinz.
Excellent article, deeply agree, should be shared on Reddit and other social networks. Market capitalization does not tell much about the amount of fiat put into a coin. Thinking that way would be wrong. By the way, I noticed nowadays that market capitalization is used as a criteria by more and more people willing to dig a potentially high reward coin on the short term (low market cap. is what is looked for).
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September 04, 2018, 12:38:39 PM
 #5

The crypto market cap can be a good guidance in some situations but shouldn't be treated like a definitive argument to buy something or not. What stands behind that price is more important.
1Referee
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September 04, 2018, 12:41:29 PM
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A scammer creates 1 CrapCoin and puts it up for sale on an exchange then his buddy buys the coin for $10. Since there are 1 million "craps" in the total supply, the market cap is 10 million dollars. Now tomorrow he will sell it back to the scammer for $15. Now he can claim that his market cap is 15 million and the coin has experienced 50% growth!!!

It's all true, but...

That's exactly what made XRP's market cap become worth over $33 billion dollar right now.

These fuckers don't only control the locked 60 billion XRP units, but they also control the majority of the circulating 39.6 billion XRP units. People as stupid as they are, see that XRP "only" costs $0.33 and for that reason hoard that what's left, and this made XRP rocket up like there is no tomorrow last year.

For a coin of which its market cap is $33 billion (including the locked units) it generates a damn low daily volume of $220 million on average. Even Litecoin generates more volume than XRP. EOS even generates like $700 million in daily volume while its market cap is significantly lower. XRP is an obvious case of how you can make yourself look like a large coin, but when you look at their volumes, their trickery gets exposed.
Diablesfunis
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September 04, 2018, 12:52:18 PM
 #7

Most of them is indeed nonsense as there's no way a project without a working product actually have that much marketcap, but hey it's crypto and marketcap isn't a good indicator. The marketcap is full of shitcoin with no volume and development and a thousand of them will contribute to some extent to the crypto marketcap. It's not a good indicator if you want to put some money into project but you can use it to guess roughly how far a coin can grow compared to its competitor.

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