I've a huge problem with the current market situation: Coins less than one Dollar. Why? Because people buy them like crazy. Take a look at CoinMarketCap. You have anyway a tab open ;) and scroll down the list. The most gainers are all Coins which are or were a week ago <1$. Here are some examples: Ripple, Cardano, NEM, Tron, Stellar, Verge ...
Why this is a problem in my opinion? There a lot of new people in the space that don't understand that price is as unimportant as the name of a coin.
Here's an example with IOTA. The price you see on CMC is in MIOTA (Mega IOTA, which are 1.000.000 IOTA). Imagine CMC would show you the price for one KIOTA (1.000 IOTA) which would be around 0.004$ or for one GIOTA (1.000.000.000 IOTA) which would be ~4000$. That are huge price jumps but it doesn't matter! The value for IOTA itself stays the same. The only thing that matters is the market cap, which is a combination of price and supply.
The newbies wanna catch the new BTC and imagine/hope their coin can go up to the same price as BTC. I have this opinion because I read more often stuff like: "Ripple to 100$???" or "ADA to the mooooon 1000$!!!!" which makes me wanna cry. (These are just two randomly picked examples, I don't dislike these coins). That means that they would be at a many TRILLION USD market cap. Probably in ten years if everything goes perfect. But I see 95% of them crashing again as people realise they are overvalued. At least I hoped so. BUT I also didn't see XRP ever reach 1$ and here we are at nearly 4$. So I might be wrong, no one can see into the future. I just want to point out that the price is irrelevant and that it scares me so many people don't get it.
Not even the market cap is what really matters. It is just a multiplication of the hyped price that the fraction of the coin-holders is currently willing (and able) to sell for and it does not reflect the real value at all.
Yeah, exactly @monoxid. The only use for the market cap is comparing with other cryptocurrencies. Crypto market caps really shouldn't be compared with other assets. Also, getting sick of people saying '$X billion just came into the market' when people don't understand that the market cap =/= total capital invested. Unfortunately, these are just the problems we face with an onslaught of uneducated people rushing into the market. We've all got to painstakingly point them in the right direction at the end of the day!
what do you mean with "market cap =/= total capital invested"? i think i have an idea but i'm not sure with it...
@mrdupin
People always seem to confuse the market cap as being equal to the total capital invested. So will say things like "$10 billion just left the market in an hour!" or "There is now $200 billion more invested into crypto!" when the actual totals for the real capital invested are much lower. This is because not everyone bought the coins they hold for the current market price.
However, as time goes on and the bull market begins to ease off, or even reverse slightly, these numbers should begin to converge. As there will be people who bought in at higher prices than the market price which will mean the market price is closer to the average entry price per unit for hodlers.
It's safe to say that this isn't the case right now. Especially when some coins make triple digit gains in a day.
Hope this clears what I meant up a bit more!
Ok thank you, first time i think about that! This brings a new perspective for me and my investing behavior.
It means that not all who hold a certain coin have bought it for the current market price. They probably bought it for much lower price, therefore the total capital invested does not equal the market cap.
Yes, this type of mentality is ridiculous and disappointing to see. Really is a sign that many average Joes are joining the market.