To calculate the future price of a cryptocurrency using market capitalization and circulating supply, you can use the following method :
1. Determine the Desired Market Capitalization: Decide on the future total value of all the coins of the cryptocurrency. This is known as the market capitalization.
2. Identify the Circulating Supply: Find out how many coins are currently available in the market. This is called the circulating supply.
3. Divide the Market Capitalization by the Circulating Supply: To find the future price of a single coin, you divide the desired market capitalization by the circulating supply.
Example Calculation:
Suppose you expect the market capitalization of a coin to reach $1 billion and the current circulating supply is 50 million coins.
- Market Capitalization: $1 billion (or $1,000,000,000)
- Circulating Supply: 50 million coins (or 50,000,000)
You would divide $1 billion by 50 million coins:
Future Price = $1 billion ÷ 50 million coins
This division gives you a future price of $20 per coin.
Considerations
- Changing Supply: The number of coins in circulation can change due to various factors like mining, staking, or coin burns.
- Market Influences: The price can also be affected by market sentiment, adoption rates, technological developments, and regulatory news.
Using this method allows you to estimate the future price of a cryptocurrency by understanding the relationship between its market capitalization and circulating supply.
#MarketCapExplained $BTC $ETH