Market value determines the outlook for an investor’s future. Market value of the market cap is the number of units of a stock or asset multiplied by the price of each unit of stock or asset. The amount of supply or number of currencies available is called the volume of coins that are being traded and circulated in people’s hands.
What is the benefit of knowing the market value?
If an investor is unfamiliar with the concept of market value, he may think that the value of cryptocurrency A is greater than cryptocurrency B because it is more expensive. If the lower price of Ramzarz B may be due to its higher supply. So price can’t show the value and credibility of a digital currency, and the Cap Market is a better measure.
What does the Cap Market show us?
Market value is not just a number and can give investors a lot of information. The most important information is:
The relationship between market value and investment risk is an inverse relationship. The higher the market value of a cryptocurrency, the lower the investment risk. If a cryptocurrency market is of little value, it poses a great threat to investors. Bitcoin has a lot of market value, so investing in it is safer than other cryptocurrencies. But on the other hand, the profit that the Bitcoin market gives us is less than the profit that the market can give a less valuable digital currency. The more risk you take, the more profit you will make.
Ability to manipulate the market
If the market value is low, it is easily exposed to manipulation. Profiteers in such markets can manipulate the market by taking a sufficient amount of a currency.
Investigate the importance of a technology in the market
By comparing the market value of a digital currency with the total amount of capital available in this area, we can have an overview of the place of that cryptocurrency in the market.
Dead coins in the world of digital currencies
There are always people who lose their wallet passwords and can no longer access their assets. Systemic problems may also cause a person to lose capital. Hackers, on the other hand, may steal capital from market participants. All of these lost assets are called dead coins, which have a significant impact on calculating market value. In fact, the Cap Market is a digital currency from the following formula:
The market value is equal to (all coins in circulation-number of dead coins) * current price
Since there is no efficient way to determine the number of dead coins, the market value is not accurately calculated.