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@ LiโฟฮสLiรธฮท ๐ดaยณ
2025-05-09 11:43:01
๐๐ฟ๐๐ฝ๐๐ผโ๐ ๐๐ฎ๐ป๐ด๐ฒ๐ฟ๐ผ๐๐ ๐๐น๐น๐๐๐ถ๐ผ๐ป: ๐ง๐ต๐ฒ ๐ ๐ฎ๐ฟ๐ธ๐ฒ๐ ๐๐ฎ๐ฝ ๐ฉ๐ฎ๐น๐๐ฎ๐๐ถ๐ผ๐ป๐
https://image.nostr.build/42b2b10aa8a66bd9c8c0b068f995cd935d54d051788670488f9e9e12ac97d23c.jpg
Market capitalization is a simple yet misleading metric that creates a false sense of value and can lead investors to wrong decisions.
It is driven by price and supply numbers that do not accurately represent true value or investment size.
Investors should be cautious and avoid relying on market cap as a real valuation tool in the crypto space.
Despite its widespread use by both novices and experienced investors, Market Cap does not accurately reflect the true value of a cryptocurrency or token.
Let's see why.
๐๐๐ซ๐ค๐๐ญ ๐๐๐ฉ = ๐๐ซ๐ข๐๐ ร ๐๐ข๐ซ๐๐ฎ๐ฅ๐๐ญ๐ข๐ง๐ ๐๐ฎ๐ฉ๐ฉ๐ฅ๐ฒ, ๐๐จ๐ญ ๐๐๐ฅ๐ฎ๐
โMarket cap is calculated by multiplying the circulating supply of a cryptocurrency by its last transaction price.
โThis metric reflects price, not intrinsic value. Price is driven by market sentiment and speculation, which often have little connection to the actual utility or fundamentals of the asset.
โLarge swings in market cap often occur without any real change in the underlying technology, adoption, or fundamentals-just changes in what people are willing to pay.
๐๐๐ซ๐ค๐๐ญ ๐๐๐ฉ ๐๐ง๐ฅ๐ฒ ๐๐๐๐ฅ๐๐๐ญ๐ฌ ๐ญ๐ก๐ ๐๐๐ฌ๐ญ ๐๐ซ๐๐ง๐ฌ๐๐๐ญ๐ข๐จ๐ง ๐๐ซ๐ข๐๐
โIt assumes that all coins or tokens are worth the last transaction price, which is unrealistic.
โThe last price is just a snapshot and does not represent the diverse prices paid by different holders or the true liquidity of the asset.
๐๐ข๐ซ๐๐ฎ๐ฅ๐๐ญ๐ข๐ง๐ ๐๐ฎ๐ฉ๐ฉ๐ฅ๐ฒ ๐ข๐ฌ ๐๐ฏ๐๐ซ๐๐ฌ๐ญ๐ข๐ฆ๐๐ญ๐๐
โCirculating supply figures often include lost coins or tokens that are illiquid or inactive, inflating the market cap.
For example, millions of Bitcoins are estimated to be lost, which should reduce the effective circulating supply and thus the market cap.
๐๐๐ซ๐ค๐๐ญ ๐๐๐ฉ ๐๐จ๐๐ฌ ๐๐จ๐ญ ๐๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ ๐๐๐๐ฅ ๐๐จ๐ง๐๐ฒ ๐๐ง๐ฏ๐๐ฌ๐ญ๐๐
โMarket cap can be artificially inflated by low trading volumes and large token supplies.
A token with a huge market cap might have very little actual money invested.
โChanges in market cap do not correspond to equivalent inflows or outflows of capital.
๐๐๐ซ๐ค๐๐ญ ๐๐๐ฉ ๐ข๐ฌ ๐ ๐๐ฌ๐๐ฅ๐๐ฌ๐ฌ ๐๐จ๐ฆ๐ฉ๐๐ซ๐ข๐ฌ๐จ๐ง ๐๐จ๐จ๐ฅ
โComparing market caps between different cryptocurrencies is meaningless because each asset serves different purposes, markets, and user bases.
โMarket cap comparisons often lead to false conclusions about undervaluation or overvaluation.
#tags: Liberlion Article ; Market Cap