Jump to content
perebass

XRP at 589$ = 23 000 000 000 000$ market cap

Recommended Posts

Posted (edited)
10 minutes ago, Plikk said:

The money needed to get XRP to 589$ is just a fraction of that. Market cap ≠ injected money into an asset. It is the 'last price paid x available supply'. 

This is exactly what i did to make this number

589$ x 39 000 000 000 tokens actually in circulation = 23 000 000 000 000$

Is it wrong ?

Edited by perebass

Share this post


Link to post
Share on other sites
Posted (edited)
6 minutes ago, perebass said:

This is exactly what i did to make this number

589$ x 39 000 000 000 tokens actually in circulation = 23 000 000 000 000$

Is it wrong ?

It is the correct way to calculate market cap, but very incorrect to calculate funds that have been put into an asset. So with just billions of $$ injected into XRP, trillions could be a possible market cap outcome. 

Remember that even now people hold millions or 100k XRP and paid only a few k $ for it. It is now worth much more but a lot less money is involved than MC suggests. 

Edited by Plikk

Share this post


Link to post
Share on other sites

The delta of MC doesn’t equal how much money is flowing in or out.  (  a rise is a sign money is flowing in, a fall that money is flowing out, but it isn’t a metric to how much. Nor is business volume) .

Example: 4 houses for sale, originally priced at 500k . MC is at 2 million. One house is sold for 900k .  MC is now at 3.6 million, a rise of 1.6 million, with only 900k inflow of new money. In this particular case business volume is also 900k. 

So delta MC is a multiplied in-or outflow of an amount of money, purely by the definition of the formula.

Share this post


Link to post
Share on other sites
Posted (edited)
40 minutes ago, Plikk said:

It is the correct way to calculate market cap, but very incorrect to calculate funds that have been put into an asset. So with just billions of $$ injected into XRP, trillions could be a possible market cap outcome. 

Remember that even now people hold millions or 100k XRP and paid only a few k $ for it. It is now worth much more but a lot less money is involved than MC suggests. 

That decribes the current market very well, because the price rises very fast (compared to stocks) and there are many hodlers. But I wonder: If the price rises to 589 in the future, it will probably be driven by xRapid users who are forced to buy at market prices. The market cap metric would probably have a lot more meaning then (?)

 

 

Edited by Siniath

Share this post


Link to post
Share on other sites

Learn about buy and sell order books and how they get eaten up quickly with big buys and sells.  See how the price moves up and down? That's buy and sell order books gettin' eaten up.  Chomp chomp chomp.  Prices are set at the very extreme margins (and we're talking EXTREME margins for an asset with 100 billion circulation).  $23 trillion is an utterly meaningless figure.  It could never ever be realised.  If Chris Larsen sold his 5.19 billion XRP in one go, he would crash the XRP price down to something ridiculous like a few dollars (from $589) - his 5.19 billion XRP would be dumped onto several exchanges and eat up their ENTIRE buy books down to the joke buy limit orders at $1 or even 50 cents (remember, down from $589) - his DCA sale price per XRP might be something like $20 or $30, not $589 per XRP.

Share this post


Link to post
Share on other sites
5 minutes ago, Siniath said:

That decribes the current market very well, because the price rises very fast (compared to stocks) and there are many hodlers. But I wonder: If the price rises to 589 in the future, it will probably be driven by xRapid users who are forced to buy at market prices. The market cap metric would provably have a lot more meaning then (?)

 

 

Depends on the speculative demand at that time and whether banks and FI’s choose to hold their own stacks of XRP. 

Share this post


Link to post
Share on other sites
47 minutes ago, Professor Hantzen said:


Thank you so much for that. I'd just sighed audibly at seeing another market cap won't allow high prices of XRP line and your post explains it much better than I have seen it explained before.$589 here we come!

 

Share this post


Link to post
Share on other sites
1 hour ago, Professor Hantzen said:

As is common, you have the misperception that the "market cap" is representative of the total amount of money put into a token.  It isn't, never has been for any asset, and never will be.  It's not what the measurement is for.

Take the following example:

Company Abracadabra holds an ICO for token ABC.  Let's say there are 100 billion ABC tokens.  They sell 5 billion tokens during a pre-sale for 0.01 each.  So far, they've raised $50 million dollars.  Now, because the company sold those tokens directly to actual purchasers for a fixed price, there literally exactly was - and only was - $50 million dollars put into the ABC token.  At this point, based on the total supply, the "market cap" is 0.01 * 100 billion, which equals $1 billion.  But, only $50 million was ever put in?  Ok, so right out of the gate, the "market cap" is *not* representative of the amount put into the token.

Now, let's say the company lists the token ABC on an exchange.  The initial exchange price is 0.01, but it rapidly shoots up to 0.15 cents to meet demand - a lot of people want to buy ABC who missed the ICO.  The volume for the first day was around $10,000,000 traded.  That means, $10 million was sold by ICO holders, and bought by new purchasers (in amongst some people day trading, who may have bought in the morning from early sellers, and sold again in the evening to late buyers).  The market cap at this point is $15 billion, but how much money was put in?  The maximum "put in" at this point is somewhere between $50 million and $60 million.  But the market cap is $15 *billion*, over 250x larger.

Another way to put this is that after listing an ICO, and trading on an exchange, the market cap is 250x wrong if used as an indicator of "how much of a token was bought".

This situation does not improve with more listings on exchanges, and more trading.  It gets worse and worse, because as more trading happens, we lose more and more clarity on who has physically paid for a "new" token, and who is just trading them back and forth (possibly even with themselves using different accounts on the same exchange), and the price goes higher and higher.

Market Capitalisation is essentially a flawed metric, that was hastily borrowed from Stocks (where it has a little more merit, but is still flawed) and misunderstood by most people who quote it.  Where it *does* have a use is in comparing the relative strengths of different tokens against each other.  The Market Capitalisation in some sense places each tokens "price" on a level playing field, such that each token can be compared relative to each other on some sort of a scale.

However, as I've hopefully made clear here, that relative scale has nothing to do with how many tokens have been bought or sold, nor will it ever be.

We can say that Bitcoins market cap is twice that of Ripple's at some point (or the reverse...), and this can give some indication into that token's dominance in the overall space. However, we can't use these numbers to figure out how much money has been put into a token, with *any* accuracy.  To do that accurately would be to somehow magically analyse every trade on every exchange, filter out every buyer and seller individually and identify everything they did, figure out where all of the initial capital came from and in what form it was (it may have been another token for example) and after disentangling all of that huge mess, normalise everything into one currency (say USD) and figure out what has *actually* been put in.  We will never know this number for any token in any accuracy.  What we can guess fairly accurately however, is that this number will be anywhere from hundreds to thousands, to even millions of times less than the "market cap".

This is why its very possible that digital assets can potentially have a much much higher "ceiling" than the widespread misunderstanding of what market cap is would suggest.

@xrptipbot This is a nice addition to FUD bingo!

Share this post


Link to post
Share on other sites

OP to think of such high valuations when we are at .61 is amusing. In 10-15 years maybe, but no time in the near future.

Crypto as a space hasn't broken the 1 Trillion MC yet and we are talking about 1 coin being 23T (current circulation) and 58.9T once all coins are released to the market. 

I think this is all a bit of cart before the horse as the say.…….let's see $1 again, then $2, then $3, hell then we can jump to $10, but $589 speak? Many moons away if ever.

Share this post


Link to post
Share on other sites
52 minutes ago, Mods_are_tyrants said:

OP to think of such high valuations when we are at .61 is amusing. In 10-15 years maybe, but no time in the near future.

Crypto as a space hasn't broken the 1 Trillion MC yet and we are talking about 1 coin being 23T (current circulation) and 58.9T once all coins are released to the market. 

I think this is all a bit of cart before the horse as the say.…….let's see $1 again, then $2, then $3, hell then we can jump to $10, but $589 speak? Many moons away if ever.

Nice to agree with you there. 

Share this post


Link to post
Share on other sites

One thing to keep in mind regarding the 589, is that it is just a prediction not a guarantee to happen. Everyone here can predict whatever price they think it will be eoy. Obviously we would all love if it were to occur. I just hope people don't perceive that figure to be a guaranteed done deal.

Share this post


Link to post
Share on other sites

×