Market Cap Is Not A Determinant For Safe Investment

in blog •  6 days ago  (edited)

The formula for a market cap of a crypto is a current price per token times the circulating supply.

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But see, they automatically program the circulating supply in the coin. They have an initial supply that they essentially determine with the white paper when they launch their project.

They are like, this is gonna be the initial supply, and they also control the tokenomics. So they control how much of the supply is distributed, aka, they control the circulating supply.

So there's been a lot of coins that have shot up on CoinMarketCap's website because they fake the circulating supply. They fake how much circulating supply is out there, and they artificially pump the market cap of their coin. Then a whole bunch of people are like, wow, this coin's high market cap.

They start buying in, and that pumps the price. So it's not always a bad thing, but I don't look at market cap as a determinant for safety.

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