Apr 24, · Many Ethereum proponents believe Ethereum’s market cap will surpass Bitcoin’s market cap. This event is known as the flippening, since the #1 and #2 spots of the cryptocurrency chart “flip”. Back in June Ethereum’s market cap indeed reached over 80% of Bitcoin’s market cap. rows · The global crypto market cap is $B, a % decrease over the last day. Read . Market cap comparison Bitcoin is a decentralized appendage currency without a central bank or single administrator that can be sent from user to individual on the peer-to-peer bitcoin network without the need for intermediaries. Transactions are verified by mesh nodes finished cryptography and filmed in angstrom unit public distributed ledger.
Bitcoins market cap comparisonCan You Compare Cryptocurrencies by Market Cap?
But there are some serious problems with this approach. One of the most important risk factors to look at when evaluating market cap for cryptocurrency is nonliquidity in the markets. This usually happens because certain parts of crypto are locked up or lost. The biggest problem with using market capitalization as a measure of how strong a particular cryptocurrency is like you would for a publicly traded company is that there are many situations where units of the cryptocurrency are not in liquid circulation.
These locked up or lost cryptocurrency units can affect what the real market cap is of any cryptocurrency. Another example of this is the company Steem. But a huge portion of their value was locked up in something called Steem Power——a kind of social network. Which means that the market capitalization value was incredibly misleading. Sharks can also create misleading market capitalizations. In many cases — especially with smaller cryptocurrencies — a single entity will hold on to much of the coin from the very beginning of its existence.
If these sharks then dump all of that cryptocurrency onto the market at once it can devalue it really fast. Especially since cryptocurrency - at this point - can still be very volatile. Now that we've looked at why market cap can be somewhat misleading when comparing cryptocurrencies, let's look at some important metrics you should consider when comparing and evaluating cryptocurrencies.
When it comes to comparing cryptocurrencies, the first metric that you probably should watch outside of market cap is called Metcalfe's Law. This has to do with the number of users that are actually on a crypto trading network.
When you track the number of users on the Bitcoin network or other networks , it will mirror closely the amount of movement on that network.
It seems that removing users that have not made any transactions, but have just registered can make this law even more robust. Because then you are tracking users that are actually active. It can be easily gamed where there are networks that have really low transaction fees. A second metric to watch when comparing cryptocurrencies is liquidity. I touched on this earlier in the article, but you want to make sure that you are evaluating how much trading is actually going on in any given cryptocurrency.
A lack of trading could signify sharks that could dump their coins and create a drop in the market. The final metric I recommend watching is monthly volumes. Thank you. What Is Blockchain? What Does Hodl Mean? December 23, Check Latest News Headlines. Submit a Press Release.