You are wrong about this, market cap is very important in valuation. This is complete non-sense and the fact you got 3 likes for that comment, just shows the state of the crypto-investors, completely delusional to the real world.
It doesnt matter if you could liquidate everything at that price in one moment of time, whoever is buying or selling at that given point is trading at that valuation. Keep in mind that 2-7% of supply trades each day. ADA has more liquidity than many stocks.
I don’t understand your logic as to market cap being “very important in valuation” and agree with @HazelMazel3.
Please explain how the extreme example of a new coin called JBcoin, with a 300 billions circulating supply, launched on Bittrex and on the first day your grand-mother buys one single coin for 1$. The market cap instantly becomes $ 300 billions, shoots up to the top and takes over Bitcoin’s Iron Throne, even though 299.999 billions other coins haven’t even been traded. This is ridiculous, isn’t it?
How can this not be considered a misleading methodology to value coins?
There are countless articles out there explaining this in detail, but the most interesting are those new approaches trying to find a more adequate way to value cryptocurrencies.
You dont need to explain me market cap lol… You think market-cap is just some theoretical number, Its not, it represents actual real world value at whatever the trading volume at that given point is.
If you bought that coin when it was valued at 300B, you paid the valuation of 300 B… If you did, all your money is now gone… Bc the market-value was nowhere near 300B, so it couldn’t sustain it… And whoever sold it to you, did a great job. Why do you think it couldn’t sustain 300B no longer? Because its not just a number…
and what will you tell the person that bought in at 300B market cap? That market cap is just some number? lol… That person will never see his money again for sure.
Man it doesnt matter what anyone says, just read what I wrote in the thread. If you are looking to “speculate” on a coin, market cap matters, if you are looking to sell, market cap matters. He could be an idiot after all, I have no clue, I am not even going to watch it. Market cap is very easy to understand and if anyone claims you should disregard it, dont listen to them, they have no clue what they are talking about. Who knows what else they are wrong on then, if they cant grasp a simple valuation metric as market cap.
I know why you both think you are right, but thats because you dont understand the point of market-cap. You think that by invalidating market cap (as it is over-inflated in crypto due to how it is calculated) invalidates the metric and it doesn’t.
yaaaa I use binance lucky i’m not affected in the whole ordeal cause I don’t use bots. but i’m using prices from an alternate site so that shouldn’t be affecting it on other exchanges would it?
Yes, which is why market cap is a terrible metric to use for trading. If one guy buys one coin at $1000 when the rest of the market will only buy it at $1.00, then the market cap of a coin with a 1,000,000 coin supply is now $1 billion because the last transaction price was $1000, even though nobody else will buy at that price. See the problem? The actual value of the coin’s market isn’t $1B, but the market cap formula is so oversimplified that all it takes to manipulate it is one person placing one order. If I create a coin that has 1 billion supply, and convince somebody to buy 1 token at $1, that’s a billion dollar market cap. Boom, we’re all rich, right?