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?
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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.
As you can see, there is not much difference between the real and virtual worlds. Increased demand entails an increase in the cost of real shares, virtual coins, and, accordingly, increases the company’s capitalization (offline) or cryptocurrency capitalization (in virtual space). What happens when the rate goes down is also understandable.
Given the above reasons that affect the exchange value, the capitalization of cryptocurrency is not a stable value. Therefore, the competent choice of a cryptocurrency for investment is of great importance. In fact, everyone who understood and, most importantly, believed in the market’s outlook, is busy analyzing what is beyond rational forecasting. You can monitor the capitalization of cryptocurrency using numerous analytical resources working around the clock. Graphs of cryptocurrency capitalization, master-classes of cryptoeconomics gurus, articles and so on are at your disposal. The one who manages to determine the trend and make the right decision will always be winning.
Since the May of 2013 till early 2017, the total market capitalization of cryptocurrency grew tenfold from about 1.4 to 14 billion US dollars. At the same time, since the November of 2013 to the April of 2014, the total value of coins rose from 6 billion to almost 16 billion and returned to the initial 6 billion. It is clear that those who invested in promising cryptocurrencies received a worthy reward for their discernment.
By the March of 2017, the capitalization of the crypto market was steadily growing and reached $20 billion. In early January of 2018, the total conventional value of coins reached its almost 800-billion historical maximum. After this growth and up to now, it is impossible to call the cryptocurrency market stable. At the moment, there is a stagnation after a long correction. Many analysts predict a rather rapid growth. We will be monitoring any developments closely.
The fact that the cryptocurrency market has all the grounds for rapid growth in the short and long term can not be doubted, even against the background of its temporary instability. This is well understood by large traders, investors, and numerous small speculators. Your tactics and strategy, based on constant tracking of trends, will allow you to achieve good monetization.
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