Market capitalization is just one way to value cryptocurrencies

For a beginner or experienced crypto investor, the first step is to study market capitalization. Sure, Ripple might be worth only fifty cents, but with a market cap of $ 20 billion, this cryptocurrency doesn’t have much room to grow.

At the same time, many traders have not yet learned that capitalization should not be at the forefront of analysis. It is a simplified and easily manageable measure of value. Mint a trillion tokens and sell one for pennies, which will make billions on paper, but it won’t allow you to pay bills in real-time.

Keep in mind that most cryptocurrencies are trading instruments, and the market is full of flushing deals and installments. Unsurprisingly, Syscoins are priced at 96 BTC, while Ripple is priced slightly less than SpaceX.

Cryptocurrencies have been discussed and debated for years and it has provided several benefits to countries which have poor banking systems. A cryptocurrency is a financial tool that is useful and easily accessible and useful for all. Cryptocurrencies have potential and social benefits. It helps in economic growth throughout the world benefiting capital and financial services.

Definition of market capitalization

Investopedia gives this definition of this concept. “Market capitalization is the total dollar market value of a company’s outstanding shares. It is calculated by multiplying the number of shares by the current market price of one security. The investment community uses this figure to determine the size of the company’s capital. You need to understand that this measure is different from sales or the number of assets.

Several studies have shown that market capitalization statistics can be manipulated, overstated, or simply measured incorrectly. Sylvain Ribes has done research on currency exchange orders. As a result, about $ 3 billion in fabricated trade was revealed. OKEx became the leader among violators, up to 93% of its trading volume did not exist. Binance’s Zhao Changpeng called the study "really good, insightful analysis.

When Ripple’s losses in terms of market capitalization reached $ 20 billion, the cryptocurrency’s parameter estimation algorithm changed. This proves that in the classical sense, it does not fully reflect the current value of the crypto.

Features of crypto investment

Fortunately, there are alternatives to CMC - (the largest provider of information on the market capitalization of crypto), who was convicted of providing inaccurate data? These are Digitalcoinprice,, and Coingecko sites. Resources use a variety of metrics combined with the classic notion of market cap to gauge the strength of cryptocurrencies.

For example, Digitalcoinprice reported that 24-hour Bitcoin volume was $ 4.7 billion, which was achieved by increasing activity on major exchanges. During the same time period, users made $ 6.2 billion in transactions excluding mining rewards.

Cryptocurrency as currency

Another approach might be to start treating cryptography as currencies rather than stocks, focusing on p2p transactions rather than speculation. There are not many real currencies for which the buying/selling process accounts for 43% of economic activity.

In terms of assessing market capitalization, Bitcoin holds up well compared to other crypto bots. Ethereum was spent 2 times more on exchanges than actually exchanged on the blockchain. For Ethereum Classic, the overvalued capitalization was 15 times higher.

But this approach is not a dogma either. Since it does not take into account unscheduled transactions such as Lightning or Coinbase, as well as arbitrage between exchanges. This technique will remain relevant until some statistician develops a better approach, indicator, or calculates the total GDP of the cryptocurrency economy. At the same time, it still seems reasonable to tie crypto to real money, but everything is not so simple.