In this crypto currency worlds, markets are always volatile, so understanding the market capitalization and the circulating supply is very important before investing in crypto.
This things defines the coins value and the potential it will have.
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Market cap measures the wort of it and is gotten by multiplying the price by the circulating supply, revealing how dominance thr market is and boost thr investors confidence in it. Thr circulating supply in the other hand will show how many tokens are available for traders to trade, this supply impacts the liquidity and the price stability of the coin.
Knowing this will help you and investors to avoid hype and know genue opportunity to make better discussion in this volatile market.
Market Capitalization:
Market Capitalization or market cap as mostly called by readers is the total value (in dollars) of a cryptocurrencys circulating supply at the current price.
They calculate it by multiplying the current coin price by what is currently circulating supply at the current price.
In mathematics {market cap = price × circular supply}. The market capitalization gives a quick Snapshot of the coins overall influence or credibility.
For example of one coin costs $10 and there are like 1 million coins that exists. The market cap will be 10 × 1million which will be $10 million.
This determine how big it is, how popular it might be and finally how risky or stable it could be.
A coin that has big market cap is well-known and trusted with less risky like Bitcoin but has slower growth.
While the one with small market cap is either newer or less problem or more volatile with high growth potential of it and more risky since it's more unstable.
Supply and Circulation
Total supply is the total number of coins that exists including the coins that are locked, reserved for future uses or not yet available for the public to trade. It's just like a money that is printed in a country.
The circulating supply is the current number of coins that is in the market available for trader to trade. You can take it as a money cash that you are with currently that you can use to buy .
The maximum supply is the number of coins that will ever exist.
Learn this:
If come are few and they will be scares remember in economics scarcity makes prices to go up
If thr coin is flooded in the market it will lower that price.
In conclusion, before investing in crypto do well to check the market supply, circulation before investing.
Posted Using INLEO