Market value and capital supply are among the price factors; But can a token cost $ 1 million a day? At the time of this writing, the price of each bitcoin (BTC) is 47,833 and the price of each Dodge coin (DOGE) is approximately $ 0.05892.
If you are new to the cryptocurrency market, you may first think that Dodge Coin is cheaper than Bitcoin, and if it is popular enough, it may be as high as $ 20,000; But this is an irrational way of thinking. Why? Because of the market value and supply of assets.
Market value is the total dollar value of an asset that fluctuates as prices rise or fall. Cryptographic measurement websites such as CoinMarketCap rank each digital currency in market order Priced . Bitcoin is the oldest leader in the table, with a market value of $ 891 billion at the time of writing.
Market value takes into account the amount of demand during each asset. Current demand is the amount of any asset that moves freely in the market.
Market value is the product of current demand multiplied by the price of capital. Assets with higher current offerings are often cheaper. At present, assets under BTC are equal to 18.6 billion; Although this amount is slowly increasing due to mining, the maximum supply is a small amount of 21 million coins. Meanwhile, the supply during the Dodge Coin is 128.3 billion.
Based on the supply of Dodge Coins, if each coin were priced at $ 6.23, its market value would reach $ 800 billion. Bitcoin, meanwhile, which is priced at more than $ 40,000, has the same market value due to its small supply.
Reaching Dodge Coin for $ 1,500 requires a market value of $ 192.4 trillion. At the time of this writing, the total value of the crypto market is $ 1.49 trillion.
In general, assets with low supply volumes can be priced higher than assets with high supply volumes.
For example, YFI or Yearn Finance has only 36,635 tokens. YFI increased from $ 900 in July 2020 to $ 40,000 in September 2020. Price increases depend on several other factors; But usually if the supply capital is relatively large, its price is not directly comparable to the price of coins with a low supply.
Cryptographic capitals often have an equal supply of the maximum allowed allowed in their software. The supply of any capital grows slowly, until they reach their maximum supply through various means of authentication in the blockchain network, ie mining or sticking. The supply of coins or tokens can lower their price; Because endorsers sell rewards from the network to offset the cost of their activities.
Difference between Total Supply and Maximum Supply
Total supply refers to the number of coins and tokens that are currently in existence, or in rotation, or locked somewhere. This is the sum of all coins mined or exported so far, minus the sum of coins burned or destroyed. In contrast, the maximum supply is equal to all tokens or coins made or to be made from beginning to end. This means that once we reach the maximum supply, there is no way to produce those coins or tokens.
Understanding the concept of market value in relation to the price of each asset is important and helps to better understand the cryptocurrency space. You might look at the price of bitcoin and find it too expensive and immediately turn your attention to something cheaper. There are many issues with investing in cryptocurrencies.
Assets can vary in type, utilization, potential profit, associated risks, and so on. Examining each asset in terms of market value and price and supply can help assess the market.