Question

Hi guys, who could explain how the Market Cap of some cryptocurrency can influence it's price ? what's the function of that they are showing each coin's Market Cap. How i can use this information in my benifit(if it has some)?

Answer 1

Market cap & its influence on crypto currency:

Market capitalization is a well know metric for traditional securities but has unique implications on crypto. Market capitalization usually consists of outstanding stock shares by current stock price. In crypto, it is defined as supply of tokens multiplied by current price.

Traditionally stocks & bonds will be analyzed by financial ratios like P/E ratio; EPS, current ratio etc. however in crypto, teams don’t publish financial statements rather market cap provides easy check on how valuable is a cryptocurrency.

In order to calculate the market cap of a single coin, we simply multiply circulation of coins by price of that particular coin. Total market cap is nothing more of all the market caps from coins added at some point. By simply putting some support & resistance lines on the market cap graph, we have few numbers of potential reversal zones.

Function of each coin’s market cap:

Bitcon is the big dog in town with roughly 55% of total crypto market cap. It remains the most valuable coin roughly three times as valuable as ethereum. There are still few valuable cryptocurrencies. Only 12 coins have a total market cap of $1 billion

Coins with small market cap perform more when big news hits the market. A market cap is merely a number that reflects the amount of circulation coins & their price. A market cap is a quick way to gauge a coin’s value. A healthy market cap is indicative of strong coin but developers holding coins can mislead. Hence it is necessary to weigh market cap with some other metrics as well before making an investment decision.