What Is Market Cap? Does Price Even Matter? (Part 2)

In our previous post, we had mentioned about what exactly is the meaning of Market Cap and whether Price would matter or not.

In the following article, we continue this discussion related to Market Cap by mentioning methods to find cheaper cryptocurrencies and how the topic affects investing as a whole. So read on to find out more about this important aspect of finance and investing.

How could you find cheaper cryptocurrencies?

Now that you know the value of both Coin Price as well as Market Cap, now the next question how to achieve such cheap crypto coins and still be in profit?

No, there is absolutely no need to worry about fake cryptocurrencies which are available for cheap prices like 21 cents but tend to be of no good. You need to look for crypto coins that have a potential increase of about 10x, 100x or sometimes even 1000x.

Just follow these simple steps mentioned below –

Step 1) Go to the website – Coinmarketcap.com. (The screenshots that you noticed earlier were from the very same website).

Market Cap

Step 2) The website would show you top 100 coins which is arranged based upon the Market Cap (as seen previously ordered from Most Expensive to Least Expensive).

Step 3) Scroll down to find the cheapest coin or the coin which is least expensive based on the Market Cap. This tends to have a potential to increase further, compared to the Most Expensive ones at the top. But it must be noted that the cheaper ones could pose a great deal of threat or risk.

Step 4) Learn to conduct an analysis ( Warren Buffett method of investing ) on the crypto coins and conduct a certain amount of investigation or research in order to find out which of the cheaper cryptocurrencies are deemed to be undervalued.

And Voila! You now have a means of getting cheaper crypto coins which are in fact profitable to you as well.

How exactly does the Market Cap affect Investing?

Now that you have a complete knowledge about Market Cap, it is more than obvious to wonder if and how this affects your investment.

In the further discussions, two of the most common words are used, one is ‘Cheap’ and the other is ‘Expensive’. These two words shouldn’t be confused with the regular meaning of the words because as mentioned earlier, these words now mean the amount being invested in the crypto coins rather than the coin price.

This is repeated every now and then as this must be clear to the person in order to obtain the stats on how much this particular factor could afford to increase.

  • A ‘cheap’ coin can increase 10x, 100x, 1000x relatively easily
  • An ‘expensive’ coin cannot increase so much because it is already expensive

More Insight –

What Is Market Cap? Does Price Even Matter?

The Perfect Relation between Sales & Marketing

‘Selling Crypto Now Is Like Selling Apple in 2001’

 


In order to understand the concept, let’s use another example –

  • Coin A has a market cap of $10 million
  • Coin B has a market cap of $100 million

Therefore, this basically means that the total investments in Coin A are $10 million and the total investments in Coin B are $100 million.

In order to increase the Market Cap for Coin A up to about 10x or 10 times, it would just take the investments to be increased up to an amount of $100 million which is basically a $90 million increase to the initial value.

In order to increase the Market cap for Coin B up to the same 10x or 10 times, it would just take the investments to be increased up to an amount of $1,000 million ($1 billion) which basically means it’s a $900 million increase to the initial value.

So now you would wonder, which of the two scenarios, is more likely to increase 10x?

Assuming all other things are equal, coin A is much more likely to increase 10x because it requires much less extra investment to do the same with Coin B.

Final Thoughts –

Price has absolutely no indication to speak if the cryptocurrency is cheap or not. It’s the market cap that matters.
For example, as seen, a coin could be $100 and still be cheaper than a coin worth $0.01.

But at the same time another main factor to be considered while investing, is to always consider the risk or reward ratio, i.e. coins with lower market caps might have much higher potential returns but they also carry higher associated risk.

A smaller percentage of any portfolio should be committed to the higher risk coins. In other words, larger market cap coins should make up a larger portion of a good portfolio than smaller cap coins.

Hence, one must not ask the question about the cheapest cryptocurrency to invest in, rather he must ask questions like what has the more final worth with less risks involved, or which gives him success as a whole?

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Navaneetha Suresh

Navaneetha Suresh

Navaneetha, commonly known as "nav", loves to read, play badminton, play the keyboard and sing but when she's not doing any of those, she loves to write. What started as a high school hobby to write is now her ongoing passion.

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