Understanding of market cap!!

in #bitcoin7 years ago

All the time I bump into arguments where someone says something like "market cap to double we need $4bn to come in." That's not how market cap works. Market cap could be doubled with few millions. If someone throws $10m into the market at once and buys whatever he/she gets, price of ETH will rise and so does market cap. Most likely price would double and market cap would double as well.

For example-If someone puts 500k ETH to the market, it will drop the price and it will drop the market cap significantly.

It's an indicator of what is the value of the "company" with current rate and what's the appreciation of the ETH price wise.

So when someone says that ETH price might go up 5x this year, it doesn't mean that we need $25bn new money coming in, we just need few good days when price of ETH goes up dramatically.

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I love it :) You bring up a point that new investors seem to overlook. Market Capitalization is like a company's stock valuation. Amazon and Facebook are not actually worth that many BILLIONS.

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