Market Capitalization, Market Volatility And Some Confusion
Market capitalization, a coin’s capitalization is often referred to through analysis. This article is an introduction to market capitalization in the money market as well as volumes.
Market Cap, Vol :
- 1.1 Basics of capitalization
- 1.2 Basic Trading Volume (Vol)
- 1.3 The relationship between capitalization and Vol
- 1.4 Related posts
Market Cap, Vol
Basic capitalization
Market capitalization is most commonly used in the stock market. Similar to the ck market, the coin market with many similarities also has the concept of capitalization.
A coin capitalization: Total current coin * price of 1 coin. Example 1 BTC is $ 5000, the total number of BTC is 16,500,000, we will have the capitalization of BTC is:
$ 5,000 = $ 82.5 billion.
Market capitalization of all coin sums. Market capitalization can be found at:https://coinmarketcap.com/
As the number of coin increases, total market capitalization will have to be relatively comparable. For example, the current capitalization of the market is 150 billion, capitalization is 100 billion a month ago, so the average conclusion of the 50% increase is not true.
Comparing the capitalization before and after subtracting the new capitalization, capitalization is too big to be real capitalization growth on the old ones you are interested in. (For example, 10 billion, OMG, IOT etc.). That is if you are investing ETH, you should recognize that the mayor may only increase to 14x billion capitalization will look more accurate.
1. Vol and market capitalization
2. Market capitalization / Price / Coin exist / 24h transaction.
3. The market capitalization ratio of BTC over the whole market
Basic trading volume (Vol)
Trading volume is the volume of coin that traded in the day, referred to specific units such as BTC, USD or EUR, ETH. For example XRP has a transaction volume of 300 BTC / day, BTC $ 5000, when converted into USD we have: Vol. XRP 1 day: 300 * 5000 = $ 1.500.000.
The relationship between capitalization and Vol
Identifying some information as well as the intimate relationship between capitalization and vol will give you a better view of the market, about the coin itself.
Just like stocks, capitalization is only an estimate. For example, the current BTC capitalization is $ 65 billion, but if it is sold for cash, the largest amount is $ 20–25 billion (or much lower). If all 16.5 million BTC is sold, of course, the market can not absorb all, there are not enough buyers for that BTC, to sell all of it must of course lower the price so attractive money people.
So you need to determine whether raising BTC capitalization from 50 billion to 65 billion does not mean the amount injected is 15 billion. This amount must be smaller than BTC / USD (or EUR, CNY, JPY etc). So you need to know, Bitcoin or electronic money is a very small financial market, not big. Not to mention the Vol of this division to many floors, the smaller becomes. Let’s see the transaction volume + The new variable sums up the exact amount added / withdrawn.
For example: XRP increased $ 0.1, XRP 1 billion traded, so the maximum amount injected was just: 0.1 * 1 billion = 100 billion. There are millions in dollars (see Coinmarketcap), which means that the amount injected is always smaller than that, the highest is only 70%.
Large capitalization, must accompany the new large Vol really valuable. If you look at Coinmarketcap and see a 500% increase, but Vol 1–2 BTC, do not pay attention to it. With such small voltages up to 1000% is still possible, but selling is not buying anything else is another matter. Especially when it is only locally traded on a small floor.
If you invest in a “rubbish” coin, there will be times when you understand the feeling of no liquidity. The offered price is currently $ 300 for example, but the purchase price is even $ 250, which is too much difference, and even if you buy some BTC, you have been counted as sharks. If the coin is pushed through the pump and dump, some of your BTCs will be processed quickly, if not you have to spread a few dozen if you do not want to turn your order into a wall.
The market is more accurately pounded when vol large trading + capitalization increased markedly. Of course, the money goes from one pocket to another, each process of withdrawing money itself is a process of money from another investor’s pocket to market, if outside the withdrawal, the process of withdrawing money in a way. Slow and difficult to identify.
With the above information, every time you analyze the market you can see the factors: total capitalization, capitalization on the coin you are interested in, capitalization on the coin (For example, capitalization of 160 billion, BTC, ETH, LTC are almost all), total trading volume and trading volume on all currencies, trading volume of coin you are interested to give the most objective view of the whole market and your coin center.
We hope you find this post helpful !
