Love coins under a dollar? Think again!
Over these past few weeks, the market seems to love coins that are under $1. They immediately give the impression that they are affordable and has amazing potential to 10x or 100x in value. Numbers like $15,000 for a coin seem intimidating and unaffordable ... who wants to own 0.001 of a coin anyways?
This is called unit bias - we prefer specific units even though we should be looking at the total supply and market cap. The price is a result of the supply, but the supply is an arbitrary number made by the designers of the coin. It's just as easy to make a 10,000,000 supply coin as 10,000,000,000,000,000. The larger the supply, the cheaper the coin. But this doesn't have anything to do with its tech and how good a coins is.
I made this following table to show the price current coins if they had the SAME total supply as bitcoin (assuming current values, excluding potential mining) :
Now ask yourself.. would you really but that coin if it was priced like this?
It started with IOTA, then Cardano, Ripple, Stellar Lumens, Nem, TRON etc...
Especially Tron it's ridicculous.
Tron is badass!
You are exactly right, the market cap is all wat is important to look at. Yesterday I said for the first time to my friends that I see a bubble (in altcoins, not in BTC) and this is exactly the reason. People buy without any investigation.
yeah people just look at the price. oh shit its cheap buy it!
I have heard this same thing goes for shares of companies. Some people think that a share is cheap because it is x,xx price instead of xx,xx or xxx,xx.
This is educational post.
It opens ones mind to understand the true value of cryptocurrency.
Keep on steemit.
Thank you for doing this. People have been buying “cheap” coins because they want a bunch of coins for when the price goes up. But the percentage growth could be just the same in a coin that costs $300 compared to $.01. Ive been watching cheap coins and i think they get pumped by investors looking for cheap coins. But a lot of them dont bring anything new to the table. Just more of the same. I hope people see this post by you and stop making these mistakes.
It’s one thing to believe in a coins tech, but its another thing to just buy a coin based only on price.
people think the coin price means they are a penny stock. but supply matters!
Yup. Supply can tell you if a coin is overpriced or underpriced when you also look at what the coin brings to the crypto world. Looking at one factor, especially just price is a recipe for disaster. It’s a good way to burn money.
Lol. I think getting involved in crypto could serve as an economics class for some people :)
You make a really valid point about many low priced coins not bringing anything new to blockchain technology, the are pumped by investors who are scared of high prices for entry points or who "drink the koolaide" from celebrities & influencers. This same impact can be seen im the stock market. Stocks split for many reasons, but many times they want a lower entry point for investors. Amd stocks get hyped all the time. We'll see the same playbook with cryptos.
Yup. I dont think the entry price is a big deal, because you should be about percentage growth. Entry should only matter if a coin is underpriced or overpriced. But price alone is not important
True. Investor psychology is an interesting study though. Price does matter for some who haven't trained themselves to look past the baseline Unit of Measure (in this case a share of stock or a whole coin/token).
you are rite, I think its in our psychology to look on cheap rather than comparing the quality. :)
Hi Michael I've been into a coin since June last year called nlc2 the fantasy sports coin it has its own visa fiat gateway now to purchase nlc I would love you to do a review now the new ui is so smooth now this coin truly has potential 😊
In your price comparison table, shouldn't Ripple have a higher market cap than Bitcoin if the price is higher and they have the same supply? Could you explain your math or what you mean by excluding mining?
I think he took the ratio of the supply of the coin to Bitcoin’s supply, and then multiplied that ratio by the price of the coin currently
The proper way to do this comparison would be to divide Ripple's market cap with Bitcoin's supply. $122,412,211,193 / 16,783,037 = $7,294, not $18,953. He actually has the number right for Ethereum though.....
Why would you divide market cap by BTC Supply? To me that doesn’t make sense. But my method gets you the same answer. Yes his ripple calculation is off
Because you want to see how much XRP would be if it had the same number of coins as Bitcoin. Coin Price x Number of Coins = Market Cap. So Market Cap / Number of Coins = Coin Price. Your method get's the same answer but mine has one less variable, so I prefer mine.
When you multiply a ratio by a number (XRP Price), you are only multiplying the numerator of that ratio with the number.
(XRP Supply / BTC Supply) (XRP Price) >>> Yours
= [(XRP Supply) (XRP Price)] / BTC Supply
= (XRP Market Cap) / BTC Supply >>> Mine is yours simplified
This was a really great chart that gave me a different perspective on price. Thank you!
Yay thanks for reading!
NEO is still undervalued even on this chart.
NEO will be one of the players that will remain after the dump of all those sit coins. We are in the time of exuberance and this will last. But when the time comes and the dust is settled only the fittest will survive!
I agree 100%
Love it! Gives us time to stash em and generate Gas... thanks NEO!
I absolutely agree! A lot of people nowadays only look at the price value, but not the TRUE value of the coin for quick profit. Not believing on the technology that the cryptocurrency brings. sad.