How to predict the price of a cryptocurrency based on its market capitalization
The most interesting investments are long-term investments in new cryptocurrencies; this is how you can 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 just a few years.
It would seem that if you buy any inexpensive cryptocurrency now, in a few years its price will also rise to thousands of dollars.
But everyone has already seen that not every new coin follows Bitcoin's path; some cryptocurrencies, on the contrary, fall in price to zero and even undergo delisting.
Therefore, it takes a little effort to choose the right asset with the potential to generate thousands of percent profit in the coming years.
- The function of cryptocurrency,
- The fame of the developers,
- Availability of investors,
- Number of coins in circulation,
- Total capitalization.
Particularly interesting parameters are the number of coins in circulation and market capitalization; these are the ones you should pay attention to if you want to predict the maximum possible price of a token.
How market capitalization and the number of coins in circulation limit the maximum value
When calculating the likely price, there is a certain relationship between the number of coins issued and the maximum price of the cryptocurrency:
As you can see, a clear pattern emerges: the fewer coins in circulation, the higher the price per coin.
The most expensive coin is Bitcoin, with less than 20 million coins currently in circulation and a market capitalization of $1.3 trillion.
Now take Solana for example, will it be able to reach the same price as Bitcoin, as it is currently only worth $151?
Solana's market capitalization is currently $67 billion, with 446 million coins in circulation. Let's assume the cryptocurrency has increased in price by a factor of a hundred and is now worth $15,000.
Then Solana's market capitalization will reach 67x100 = 6700 million 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 circumstances. That's because the cryptocurrency market simply doesn't have that kind of money.
Given this ratio of capitalization to the number of coins, it is quite possible that Solana could increase in price several times, but not by 50 or 100 times.
The situation is similar with other coins, the supply of which amounts to billions. If a coin on the Premarket , and a billion coins are planned for immediate circulation, then it can be assumed that this cryptocurrency is unlikely to follow the path of Bitcoin.
Therefore, when deciding to purchase a particular coin, we pay attention not only to online reviews and developer statements, but also to the actual prospects, taking into account the number of coins in circulation and the current market capitalization.
It's clear that a small number of coins doesn't guarantee a high price, so we shouldn't discount other factors that influence the price of cryptocurrency.
