Why some cryptocurrencies are worth $40,000, while others stay at $0.40

At time of publication, one Bitcoin (BTC) is valued at $ 47,247, while the value of a Single Bitcoin (DOGE) is around $ 0.068. If you are new to cryptocurrencies or the markets, you might consider starting: Hey, DOGE is cheaper than Bitcoin, and if it picks up enough strength it could possibly catch up with BTC and rally over $ 20,000 as well. However, this way of thinking is illogical. Why? Market capitalization and supply of assets.

Market value is the combined dollar value of the asset’s current exposure. It changes as the value of a particular asset rises or falls. Crypto metrics sites, such as CoinMarketCap, rank each cryptocurrency by market value. Bitcoin is a longstanding leader in this category, with a market value of approximately $ 879 billion at the time of publication.

The market value takes into account the current supply of each asset. The rollover is the amount of any given asset that moves freely in the market. Multiply the traded bid by the asset price and you will get the market value of it.

Most commonly quoted assets are traded at cheaper rates in dollars per coin or token. BTC currently has a relatively low traded supply of around 18.6 million, and although this number is slowly increasing based on mining, its maximum supply is still relatively small at 21 million coins. Meanwhile, Dogecoin has a current circulation of around 128.3 billion, based on CoinMarketCap numbers.

Given DOGE’s rolling offer, it would have a market cap of around $ 800 billion if each coin was priced at around $ 6.23. Meanwhile, Bitcoin is valued at more than $ 40,000 per coin near the same market value due to the reduced supply in circulation.

Reaching a price of $ 1,500 per DOGE would require the asset to have a market cap of around $ 192.4 trillion. At the time of publication, the market value of the entire crypto market is roughly $ 1.46 trillion.

In general, assets with a low current supply can increase the price of each currency of the large population. For example, YFI Yearn.finance has a very small current exposure of only 36,635. YFI moved from around $ 900 in July 2020 to $ 40,000 in September 2020. There are many other factors driving prices up, but usually, if an asset has a relatively larger traded supply, its price per coin cannot be directly compared to that of a coin with a lower supply. .

Crypto assets also often have a maximum supply programmed into their code. The supply available for each asset is continually growing through various forms of blockchain network validation – i.e. mining or betting – until it reaches its maximum supply. Prices could soften as coins or tokens flow into the circulating supply associated with them, as auditors tend to sell their bonuses to support the network to pay for the costs of doing business.

What is the difference between total bid and maximum bid? Henrique Erhardt wrote in an article for Binance Academy, “The total supply indicates the number of coins or tokens currently in circulation or locked in some way,” adding: “It is the sum of the coins that have already been mined (or issued) minus the total. Coins that have been burned or destroyed. “

Meanwhile, the maximum exposure is the full width of the asset all the time or, more specifically, the total amount of coins or tokens that have been or can be generated. This means that once the maximum supply is reached, there is no way to produce more coins or tokens.

Understanding the concept of market value as it relates to the price of any given asset can be important, allowing you to assess the crypto space more realistically. You might look at the price of a single Bitcoin and find it too expensive, which instantly shifts your focus towards something cheaper.

A large amount of information goes to investing in cryptocurrencies. Assets differ in their use cases, their reliability, profit potential and the risks associated with them, among other factors. However, viewing each asset in light of its market value, price and supply can help assess the market.

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