of the cryptocurrency markets, the values tend to shift around quite a bit. During the first six and a half years of the existence of cryptocurrency, the total market capitalization never surpassed $20 billion. Since the most recent peak at $770 billion in 2018, it has been fluctuating in the hundreds of billions.The combined crypto market capitalization is often used as a basis for comparison with other sectors in the wider economy.
Comparing different financial markets is often a futile effort. Different industries attract different types of investors. Cryptocurrency will not automatically appeal to stock traders, foreign exchange traders, or precious metal speculators. Cryptocurrencies are a new and flourishing asset class and should be treated as such.Making financial decisions based on the total crypto market capitalization can be misleading for many different reasons.
Secondly, it can be possible to manipulate the market cap of some projects. Some projects do it to create a false sense of security and value. Staring at the total market capitalization without questioning what it actually means will lead to potentially harmful financial decisions. It’s also crucial to keep the current and future supply of a crypto asset in mind. Not all cryptocurrencies, tokens, and assets have their entire supply available at this time.
This same concept can be applied to all other crypto assets on the market. A diluted market cap simply takes an asset's current price and multiplies it by the maximum supply to ever circulate. Considering how the prices of these assets will fluctuate, it’s not an exact metric by any means. Still, it can help determine if an asset may be undervalued or overvalued.Many cryptocurrencies will see their circulating supply increase over the years.
Following the announcement of the coin burn, the BurnCoin price remains at $1. Knowing the coin burns will occur in the future, we can calculate the diluted market cap as:20 million BurnCoin x $1=$20 million
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Source: Cointelegraph - 🏆 562. / 51 Read more »