What Is Cryptocurrency Market Capitalization? A Detailed Review of the Concept
Here, in The Coin Shark, we tell you about the changes not only in the rate of cryptocurrency, but in the overall market capitalization. If you look at this concept from an economic point of view, it determines the total value of the assets of a particular company. Let's see how the concept of "market capitalization" in the cryptocurrency world corresponds to the traditional vision, and why do you need to start worrying about your investments if the capitalization of cryptocurrency goes down? Contents: (please, click the topic to scroll down to it)
1. What is cryptocurrency capitalization?It is quite easy to evaluate the capitalization of a company operating in the traditional field. To do this, it is enough to multiply the number of shares issued by a company by the stock price of 1 share. For example, 100 shares today cost $50k each. Hence the company's price is 5 million. Here everything is simple and clear, because the value of the company's stock is directly tied to tangible assets, which can be estimated in real money terms. Cryptocurrency does not belong to any state, for the most part, it does not have a material form. We want to add that everyone can actually issue their virtual coin if there is desire and a goal. By the way, that's why a huge number of tokens never got any future in the market. Nevertheless, the level of cryptocurrency capitalization can and should be evaluated according to quite traditional criteria - market rate and emission (the number of coins issued into circulation). If the number of Bitcoins and altcoins depends on the activity of issuers, then the rate determines the demand, which is influenced by such factors as:
- activity / passivity of large exchange traders;
- emergence of new developments that expand the application scope of coins and, accordingly, increase the level of confidence in them;
- real and fake news, which can turn the situation in any direction in a matter of hours.