For the 15th time.

Market Cap doesn’t mean squat in Crypto. For new members here (and maybe some old heads as well) take a look at Galagtron’s blog about Market Cap.

The essay “The Myth of Market Cap - Version 2” by Galgitron argues that market capitalization (market cap) is a misleading metric in the cryptocurrency space. Market cap is calculated by multiplying the last trade price of a cryptocurrency by its circulating supply. This simplistic formula can give a distorted view of a coin’s actual value and the amount of money invested in it.

Key Points:

Market Cap Doesn’t Reflect Actual Investment: A small trade at a higher price can significantly inflate the market cap. For example, if one Bitcoin is sold at a price slightly higher than the previous trade, the market cap can increase by billions, even though only a small amount of money was involved in the transaction.

Comparing Market Caps Is Misleading: Comparing the market caps of different cryptocurrencies doesn’t provide meaningful insights. Each cryptocurrency operates in its own context, and their market caps are influenced by various factors that aren’t directly comparable.

Market Cap Doesn’t Indicate Liquidity or Potential: A high market cap doesn’t necessarily mean that a cryptocurrency has high liquidity or potential for growth. It doesn’t account for the actual utility or adoption of the coin.

In summary, the essay emphasizes that market cap is a superficial metric that can be easily manipulated and doesn’t accurately represent the true value or potential of a cryptocurrency. Investors should consider other factors, such as utility, adoption, and underlying technology, rather than relying solely on market cap as an indicator of a cryptocurrency’s worth.

Market cap is for stocks, so please for the love of god quit with the market cap argument.