How to #DYOR? Series #2

Learn the mechanics of market cap.

Market cap is calculated by multiplying the circulating supply with the coin unit price. When the price moves, the market cap follows. The free market must determine the price as marketcap. However, some projects launch their tokens with high prices or lock most of the circulating supply for themselves, creating a fake market cap value for the coin.

Some investors mistakenly believe that coins with a huge market cap are trustworthy. This is not accurate. Earned marketcap and created marketcap are entirely different things.

#BTC has around an $800 billion USD market cap, which it has genuinely earned. However, there are numerous coins with billions in USD market cap that lack any real-world value. As you know, building a billion-dollar company is highly difficult, but for some in the crypto space, it's as simple as clicking buttons.

Although a large market cap means there is less room for the price to go up and an enormous potential for it to go down. Therefore, the total supply or max supply should be close to the circulated supply. Additionally, the market cap shouldn't be excessively high to create a live savings opportunity for you.