Hello all ProjectHope friends. Hope you are in fit condition and keep your body healthy. Don’t forget to stay at home wherever you are in lockdown area.
Since Hive price has increased sharply, I try to brainstorm. Then I had a question? Why most new coins, or hardfork coin seem to pump and dump easily? I tried to do an amateur research, I thought I have found the answer.
Since Hive price has increased sharply, I try to brainstorm. Then I had a question? Why most new coins, or hardfork coin seem to pump and dump easily? I tried to do an amateur research, I thought I have found the answer.
Pic : https://pixabay.com/id/photos/emas-cryptocurrency-uang-keuangan-3080552/
In my analysis , there are strong relations between marketcap and volatility. OK our discussion today is marketcap and volatility.
If you are economic students, I ask for permission to talk these topics because you know more about them.
WHAT IS MARKETCAP?
Marketcap or market capitalization is a term in conventional securities.
Marketcap is multiplying the amount of outstanding stock shares by the current stock price.
Incryptocurrency, marketcap is circulating supply of tokens or coins multiplied by current price.
https://www.coinist.io/cryptocurrency-market-cap/
If there are 1000 circulating tokens, and the price in exchangers is $2, it means that the marketcap is $2000.
WHAT IS VOLATILITY?
It is a rate at which the price of a security increases or decreases for a given set of returns.
https://economictimes.indiatimes.com/definition/volatility
Large cap of a coin is less volatile than low cap of coin. However, low cap coin has larger return. High volatility means that a coin price fluctuate rapidly.
Look at the chart above! Bitcoin market cap is the largest about 140 Billion USD. It is almost 50% of cryptocurrency marketcap. That is why bicoin price influences all coins price.
Hive and steem have small cap. The volitility of tokens are still high because the circulating tokens are lower than bitcoin or ethereum. However, when you invest in Hive and Steem your future return is larger because Hive and Steem have more opportunity to grow.
FACTORS THAT CHANGE COINMARKETCAP
Before talking about coin marketcap, let’s see factors that change marketcap in general business. There are some factors that influence change in marketcap;
- Investor’s perspective about a stock, investors always monitor company’s growth. The bad news about a company will make investors sell the stock. It will effect to the value of the stock in market. So, the reducing price value in market will change the marketcap.
- Company financial health is important to stock price. When a company gains incredible profit, it will influence market. The price of stock will also rise.
How about marketcap in cryptocurrency? I think not all those practices in stock exchange the same as in cryptocurrency but cryptocurrency users also are effected by news and development of the coins from the developers.
- Security issue can effect the value of a coin. Cryptocurrency claims that security is no 1 issue so that news about it will have high impact in pricing. This change will influence in coinmarketcap.
- Hardfork
There will be pros and cons in hardfork, however the opportuinists or traders will get more profit from hardfork because they will earn free money. Before hardfork the price of a coin will pump and then dump after hardfork. This will effect to coinmarketcap. - Coins developments and partnership. Cryptocurrency holders will be happy to hear news when their coins that they hold announce partnership with trustworthy companies. The price of the coins usually increase. Partnership is often followed by development of the Dapps of the coins. That is a good news for cryptocurrency holders.
INVEST NOW OR LATER
Before you invest in cryptocurrency let’s think about these aspects. You can use coinmarketcap to know the position of the coins though coinmarketcap is not perfect metric.
- Function
Does the coin has function? You should read whitepaper of the coin before investing. You can get knowledge about the coin. Does the coin have real function in economy? - Currency
The coin should be applicable as currency. It is not only as filler to wallet. - Partnership of the developers
Developers partnership with trustworthy companies show that the project is a valuable instrument in economy and business. - Developer team.
You should know that developers of the coin are trusted and scammers. - Dapps ( Decentralized Application)
The platform of the coin should enable to develop dapps so there will be more dapps in the future development. This will attract new developers to join the coins. - Potential earning
By holding the coin , you have potential earning like in steem and hive. Now new coins also offer the same platform like eos with trybe.
That’s a little sharing and hope you will be more careful to invest in new cryptocurrency. Thanks for reading and don’t forget to follow @lebah because I will follow you back!
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