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Market cap explained bitcoinThe Coin Market Cap Explained - Crypto Income: Make Money with Bitcoin & Cryptocurrency
The status quo is working well for the dollar because it is dominant through the SWIFT mechanism and the corresponding banking system, he said. The US government can also raise debt at attractive interest rates, supporting the dollar's status. But a competitive challenge lies in the crypto space and in the rise of stablecoins.
Times Internet Limited. All rights reserved. For reprint rights. Times Syndication Service. Globe Icon An icon of the world globe. Amazon Sale Tech Business. Link Copied. A chain of block erupters used for Bitcoin mining. Bitcoin's market cap could hit a trillion dollars as early as , according to Blockchain.
Although the bitcoin rally was largely driven by institutional investors, he expects to see continued buy-in more from retail and Wall Street investors going forward. Understanding the Market Cap can also help you avoid those altcoins with less moneymaking potential.
The market capitalization is the value of all the units of a cryptocurrency that are for sale on the market right now. It is a strong indicator of demand because it shows you how much money has been invested in a particular altcoin.
Basically, market cap is the estimated networth of a cryptocurrency, as given by CoinMarketCap. The Circulating Supply is the number of units of a specific currency for sale in the market at any given time. The Coin Price is the cost of an individual unit of an altcoin. On November 15, , the Circulating Supply of Ethereum was Fortunately, you will not have to calculate Market Cap yourself because there are plenty of websites like CoinMarketCap that will do it for you. Taking a close at them and reading through the results can show you the potential value of a cryptocurrency.
Now, keep in mind that the marketcap, as given by the main source that the entire crypto world follows coinmarketcap. This will always be MUCH higher. A good rule of thumb is the lower the Market Cap, the higher the potential return on equity of cryptocurrency.
In other words, you can make more money by investing in coins with a lower market capitalization because there is more room for a market cap increase i. However, not every investor is comfortable investing in lower market cap coins. Many people invest in Bitcoin because its market capitalization has historically far higher than its closest rival, Ethereum. While high cap coins may be more stable, they are still volatile. Many people including large corporations and financial experts regard Ethereum as a far better cryptocurrency than Bitcoin.
They think this way because the ecosystem and technology behind Ethereum is far more versatile. It is possible to build solutions like smart contracts and markets in Ethereum, but not in Bitcoin. A big reason for this is that Bitcoin is that the only altcoin a lot of people are familiar with. Those individuals are investing in Bitcoin, only because are not aware of alternatives like Ripple and Ethereum.
Many other factors can distort the cryptocurrency market. Some central banks, the one in China, have been researching the possibility of national cryptocurrencies. Every investor should research the news about altcoins carefully on a regular basis — to avoid such nasty surprises.
Investors should also carefully examine the Market Caps of all cryptocurrencies and estimate what a reasonable growth potential might be for the coin you choice to invest in. Understanding the Market Cap and its limitations can help you make money in altcoins.