To calculate the approximate value of a cryptocurrency before listing on an exchange, investors and crypto project participants use several key metrics and approaches. Although exact figures are difficult to predict, based on certain metrics, it is possible to make an educated guess. Here are the basic steps for such a calculation:
1. Total issue and circulating supply
- Total Supply is the number of coins that can be issued. This figure is usually specified in the project's tokenomics.
- Circulating Supply is the amount of coins that will be in circulation at the time of listing. This may include coins distributed through airdrops, staking rewards, or other distribution mechanisms.
2. Market Cap
Market capitalization is one of the main factors for assessing the value of a token. To calculate it, you need to:
- Market Cap = Price of 1 coin × Circulating supply
For example, if a project expects their market cap to be $100 million and the circulating supply is 10 million coins, then:
Price of 1 coin = {Market Cap}/{Circulating Supply} = {100,000,000}/{10,000,000} = $10
3. Fully Diluted Valuation (FDV)
This indicator takes into account the value of all coins when full emission is reached:
- FDV = Price of one coin × Total issue of coins
This indicator is especially important for understanding the long-term prospects of the project.
4. Comparison with similar projects
Investors can also compare the project with similar existing cryptocurrencies that are already traded on exchanges. This allows them to determine the approximate market capitalization based on the token value of competitors with a similar economy and level of development.
For example, if a project is like a DeFi project with a market cap of $500 million and a circulating supply of 100 million coins, the price of one coin could be valued at $5.
5. Financing and investment
Information about the investments raised can indicate the potential price of the token. If the project raised, for example, $20 million in investments in the early stages at a price of $0.10 per token with a total supply of 200 million coins, then the price of the token after listing can be expected to be higher than this level.
6. Expectations and hypotheses of market participants
Before listing, there is often a public token sale or private investment rounds where the price of the tokens for participants is set. This data can serve as a guideline for determining the minimum value of the token at the time of entry into the market.
Let's assume that the project has the following data:
- Total issue: 1 billion tokens.
- Circulating supply at the time of listing: 100 million tokens.
- Investments raised at the token sale stage: $5 million for 10% of the total supply (i.e. 100 million tokens).
We can estimate the price of a token at the time of listing by dividing the total value of tokens by their circulating supply:
Token price = {5,000,000}/{100,000,000} = $0.05
If the project expects a market cap of around $50 million, then:
Token price at the time of listing = {50,000,000}/{100,000,000} = $0.50
Influencing factors:
- Liquidity. Exchanges can influence the price of a token through liquidity provision and market making mechanisms.
- Popularity and excitement. High interest in the project at the start can increase demand and raise the cost of tokens.
- Fundamental factors. Key indicators of project success, such as product development, number of partnerships and audience.
The estimated value of a cryptocurrency before listing is calculated based on a variety of factors: market capitalization, circulating supply, investment, and market demand. All of these metrics allow you to make educated guesses about the possible price of the token after listing.
More details on earning on airdrops can be found in my TG channel (link in the profile header)
#BTC #BinanceBlockchainWeek #Bitcoin #ETH #Ethereum