Calculating Cryptocoin Market Cap – Running The Numbers to Predict the Future
A lot of people have been asking about Ripple and Verge and other coins vis a vis what price they should buy in or if they should wait for a dip. Calculating cryptocoin market cap is the best way to get a clear picture. How? You calculate a coin’s potential price based on the market cap and available supply. Basically, you take the projected or current market cap of any coin and divide it by the available amount in circulation.
Example: Beyond all belief let’s say XRP takes over as the #1 crypto currency dethroning Bitcoin. With a market cap of $243.6 billion and roughly 39 billion coins in circulation, the highest price XRP could ever be would be around $6.25 each. We reach this number taking the present market cap and divide by the number of coins that are out there. Putting aside the conjecture and speculation that the banking system is attempting to manipulate the cryptocoin markets, if Ripple releases more coins or if XRP reaches a higher market cap, you’ll need to recalculate.
Conversely, if you’re hoping XRP hits a certain price and want to know what the market cap would be at that price, calculating market cap involves multiplication. Just multiply the coin price in question by the current circulating supply and you have your theoretical market cap.
Calculating cryptocoin market cap is the surest way to bring reality to all of those conversations about which digital coin will “moon” next and where.
The conversation goes something like this: “If the ABC Cryptocoin hits $1 or if the XYZ coin hits $5 I can buy my Lamborghini!”
I’m not trying to pour cold water on your dreams but help you keep your feet firmly planted on the ground rooted in reality.
Dreaming of that “Lambo” you want to buy? Your mansion in Beverly Hills? Your yacht in Miami? Let’s first run the numbers using the calculation methods above.
If the ABC coin has 100 million coins in circulation and it’s current market price is $5 the market cap is $500 million.
If you think ABC can hit $10, the ABC market cap would be $1 billion.
Now here’s the part you need to pay close attention to.
At the moment the total combined market cap of ALL cryptocoins is about $623 billion. Our hypothetical ABC coin has a $500 million market cap, or .080% of overall market cap. Here’s the formula: ($500 million divided by $623 billion) x 100
If ABC “moons” to $50 because of new investor interest leading to tremendous increases in demand keeping the 0.88% share of overall market cap, ABC has a market cap of $5 billion. HOWEVER, the total market cap of all digital currencies would have to be over $55 TRILLION dollars.
That’s not going to happen any time soon. To put this in perspective –According to the World Gold Council, the total value of all gold ever mined is about $7.8 trillion.
I’m very bullish on the cryptocoin markets and there is no question that money can be made yet we need to maintain a sense of reality. That’s why calculating cryptocoin market cap in any given situation is so important.
