How to predict the cryptocurrency rate based on capitalization
The most interesting investments are long-term investments in new cryptocurrencies; this is the way to increase your capital by a hundred or even a thousand times.
Everyone remembers the story of Bitcoin, when the first cryptocurrency rose in price from $0.03 to tens of thousands of US dollars in a few years.
It would seem that buy any inexpensive cryptocurrency now and in a few years its price will also rise to thousands of dollars.
But everyone has already become convinced that not every new coin follows the fate of Bitcoin; on the contrary, some cryptocurrencies drop in price to zero and are even delisted.
Therefore, you need to try a little to choose the right asset with the prospect of bringing thousands of percent profit in the coming years.
- Cryptocurrency function,
- Developer fame
- Availability of investors
- Number of coins in circulation
- Total capitalization.
Particularly interesting parameters are the number of coins in circulation and capitalization, and you should pay attention to them if you want to make a forecast of the maximum possible price of a token.
How capitalization and the number of coins in circulation limits the maximum value
When calculating the likely price, there is some pattern between the number of issued coins and the maximum price of the cryptocurrency:
As you can see, a certain pattern is clearly observed: the fewer coins in circulation, the higher the price per coin.
The most expensive coin is Bitcoin, currently there are less than 20 million coins in circulation, and the capitalization is $1.3 trillion.
Now take Solana for example, will it be able to reach the same price as Bitcoin since it is currently only worth $151?
Solana’s capitalization is currently 67 billion, and there are 446 million coins in circulation; let’s assume that the cryptocurrency has risen in price a hundred times and now costs $15,000.
Then Solana’s capitalization will reach 67x100 = 6700 mil. or 6.7 trillion dollars.
Today, the total value of all cryptocurrencies in circulation is $2.56 trillion, meaning Solana cannot rise to $15,000 under any scenario. Since there is simply not that much money in the cryptocurrency market.
For such a ratio of capitalization and the number of coins, it is likely that Solana could rise in price several times, but not by 50 or 100.
The situation is similar with other coins, the number of which amounts to billions; if a coin on the Premarket already costs a couple of dollars, and a billion coins are planned to be put into circulation immediately, then we can immediately assume that this cryptocurrency is unlikely to repeat the fate of Bitcoin.
Therefore, when deciding to purchase a particular coin, we pay attention not only to reviews on the Internet and statements from developers, but also to real prospects, taking into account the number of coins in circulation and current capitalization.
It is clear that a small number of coins does not guarantee a high price, so we do not discount other factors that influence the price of cryptocurrency.