How Cryptocurrency Value Works: Supply, Capitalization, and Volatility

The value of a cryptocurrency is primarily defined by its circulating supply and market capitalization, calculated using the formula:

Capitalization = Token Price x Tokens in Circulation

For example:

VANA has 30 million tokens in circulation and a capitalization of $571 million, making each token worth $19.90. With few tokens in the market, volatility is higher, as small transactions have a strong impact on the price.

DOGE, on the other hand, has billions of tokens in circulation, which keeps the price lower and more stable, as a large volume of transactions is needed to cause fluctuations.

This happens because limited supply makes the market less liquid, increasing price variations. On the other hand, cryptocurrencies with high supply are less volatile, but may grow more slowly.

Conclusion: Cryptocurrencies with few tokens, such as VANA, offer quick opportunities, but with high risks. Assets with a greater supply, such as DOGE, tend to be more stable. Knowing how to analyze these factors is essential for making decisions in the crypto market.