Market cap doesn’t mean people have invested that much money in a project!

For example, Notcoin had a market cap of $1.25 billion at some point yesterday, which doesn’t mean people spent $1.2 billion to buy it.

It’s calculated by multiplying the current price by the total number of tokens in circulation.

For example, if the total market cap of a coin is $3 billion, it doesn’t mean people spent $3 billion to buy cryptocurrencies. It could be more! Or less. It’s just a simple valuation.

Here’s how to understand how much money is invested in a coin:

1. Trading volume

Trading volume in a coin represents the total amount of cryptocurrency traded in a specific time period (e.g. 24 hours). While this doesn’t directly tell you the total amount of investment, it can give you insight into the activity and interest in the coin.

2. Historical trade data

Analyzing historical trade data can give you an idea of ​​the total investment over time. By examining the price and volume over different periods, you can estimate the total amount of money that flowed into a cryptocurrency.

3. Initial Coin Offerings (ICOs)/Token Sales

For newer coins, the amount of money raised during an initial coin offering (ICO) or token sale can provide an estimate of the initial investment. These numbers are usually publicly disclosed and can be found in the project whitepaper or official announcement.

4. Market Orders and Liquidity

Examining the order books of major exchanges can provide insight into buy and sell pressure, which can help estimate how much money is being invested in tokens.

For example:

To understand the actual funds invested in Notcoin, you can:

1. Check the daily trading volume on major exchanges to get an idea of ​​recent activity.

2. Check historical trading volume and price to estimate cumulative investment over time.