Understanding Market Cap, Price and Tokenomics
By Ol Boy Photos — $BOOMER Community Member
You can always pick out the crypto newcomer fairly easily. “I just bought $100 worth of Shiba Inu. If it goes to a buck, I’ll be a millionaire!” It’s common practice to denominate by price. However, there’s a lot more to it than just price!
Market cap = current price X circulating supply
Let’s say, for example, there are a half billion Boomer tokens in circulation, and the current price is $1.00; we would then have a market cap of $500,000,000. Circling back to the Shiba Inu reference, today’s price is $0.00002568. The circulating supply is 589.27 trillion Shiba Inu, giving us a market cap of $15.14 billion dollars. In order for it to “just go to a dollar”, the market cap would have to be 38,264x, which would put the market cap at $589.27 trillion. Today’s Bitcoin market cap sits at $1.34 trillion, so the odds of Shiba Inu achieving a $1.00 price are virtually impossible.
Now that we know how market cap is determined, let’s consider another relative term we see on sites such as Coin Market Cap, Coin Gecko, or Dextools: fully diluted market cap. This comes into play when the total supply is greater than the circulating supply. Many projects have token unlock schedules, meaning buyers can find out when more tokens will be released and how many additional tokens will hit the market on a given date.
Fully diluted market cap = total supply X current price.
One thing to keep in mind: typically, when token supplies see larger token unlocks, the price will drop because supply will outpace demand. Take the gaming token $Karrat as an example. The current circulating supply is 87.68 million; the total supply is one billion. Less than 10% of the total supply is in circulation. The current market cap is $94.74 million, with a fully diluted market cap of $1.08 billion. This implies there will eventually be dilution.
Knowing and understanding the difference between circulating and total supply is important. When one doesn’t equal the other, how many tokens are left to be dispersed? Are there investor unlock or token release schedules that will help you plan accordingly?
The bottom line is this — there’s a lot more to it than buying a bag and hoping it “just goes to a buck”! Know how things work before diving in headfirst! If you have any questions, feel free to visit the Boomer on Base Telegram (https://t.me/baseboomerportal ), and thousands of folks will be willing to help you better grasp the wide world of crypto.
Disclaimer: The content provided here is not financial advice. Its purpose is to educate and contribute to the vision of BoomerOnBase in onboarding the next 10,000,000 boomers to @base. Please conduct your research and consult with a financial advisor before making any investment decisions.
Engaging with the Boomer Community
To take the next step in your crypto journey, immerse yourself in the vibrant Boomer community through various channels:
- Telegram: Join the Boomer Telegram group to connect with like-minded individuals, share insights, and stay updated on the latest developments in the crypto sphere.
- YouTube: Dive into Boomer’s YouTube channel for educational content, tutorials, and interviews with industry experts, empowering you with knowledge and inspiration to navigate the crypto landscape.
- Social Media: Follow Boomer on Twitter, Instagram, and Facebook to engage with the community and participate in discussions.
By actively engaging with the Boomer community, you can unlock a wealth of resources, support, and camaraderie on your journey towards crypto enlightenment.
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