Altcoins Talks - Cryptocurrency Forum
Crypto Discussion Forum => Cryptocurrency discussions => Topic started by: MrSpasybo on February 13, 2021, 10:16:49 PM
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Assets with more circulating supply often trade at cheaper prices in terms of dollar value per coin or token. BTC currently holds a comparatively low circulating supply of about 18.6 million, and even though this number increases slowly based on mining, its maximum supply is still relatively small at 21 million coins. Meanwhile, Dogecoin has a circulating supply of about 128.3 billion, based on CoinMarketCap numbers.
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Generally, assets with low circulating supply can rise higher in price per coin than assets with large supply counts. Yearn.finance’s YFI, for example, holds a very small circulating supply of just 36,635. YFI went from approximately $900 in July 2020 to $40,000 in September 2020. A multitude of other components factor into price rises, but typically, if an asset has a comparatively larger circulating supply, its price per coin cannot be directly compared to the price of coins with a smaller supply.
Article: Why some cryptocurrencies are worth $40,000, while others stay at $0.40 (https://cointelegraph.com/news/why-some-cryptocurrencies-are-worth-40-000-while-others-stay-at-0-40)
I think this is just a non-objective article because the author only considers the effect of the total supply on the token price. On our forum there has been a topic about this problem: https://www.altcoinstalks.com/index.php?topic=191149.0
And I still keep my view on aggregate supply:
We all acknowledge that the price of a token depends on the law of supply/demand in market, and scarcity can reduce selling pressure, while at the same time token price increases.
As such, the total supply affects the token price, precisely the volatility of the token price.
If the total supply is too low like YFI (37K), we see that the price of YFI can easily be pushed up to $45K and then to $8.5K in a short time.
If the total supply is too high like DOGE (128B), if there is no strong support from the community, the DOGE 1 cent increase is also difficult because it means that $1.28B is needed to enter the DOGE market.
Therefore, many projects have used token burning to reduce the total supply to half of the original total supply like BNB or reduce until the community agrees. This has a short-term impact, but in the long run, there won't be enough tokens for the community to use.
Consider Ethereum's case, we now admit that the total supply of Ethereum is infinite, however this does not hinder the development of ETH price, it even makes ETH closer to fiat. As long as ETH's inflation rate is lower than fiat's, ETH price will continue to rise, in addition staking & EIP-1559 will increase scarcity and ensure ETH price is stabler.
Besides the total supply, which I consider to be the store of coin/token ecosystem value, I think there are other factors determine the coin/token price:
+ The real value of the coin/token: for example, using BTC makes it easier for us to transfer money across borders, saving us a few tens to thousands of dollars per transfer. Or 1 token can help users make profits from the liquidity pool, reduce transaction costs... It can be seen that when the crypto economy is quite small, this real value only accounts for a small part of token price;
+ Expected value, majority of token price: we expect that the value of the token will increase in the future as it is widely adopted and gaining interest from many people. Since the value lies in the expectation its volatility is very high, BTC increased from $10K to $48K in a very short time;
+ Minimum cost of mining: miners are the ones who maintain the network to make a profit, they will not continue the work if the profit is not enough to maintain the minimum mining cost;
+ Mental value: for NFT tokens or more simply CryptoKitties with collectible value.
In your opinion, are there any other factors that make up or affect coins/tokens price?
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But don't forget the main factor to influence the token price is the interest of investors to buy the token on the market. This is why choosing a proper exchange to list the token, will have a big role to determine the volume of the transaction (buy-sell) the token in the market. A bad exchange may result in low buy-sell activities on the market.
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I think the circulating supply has a major role to play when it comes crypto price increase just like what the article is saying that crypto with low circulating amout, would likely increase in price just like yearnfinance the price is more than the project with big circulating number of token and coins, this can cause delay in the project.
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But don't forget the main factor to influence the token price is the interest of investors to buy the token on the market. This is why choosing a proper exchange to list the token, will have a big role to determine the volume of the transaction (buy-sell) the token in the market. A bad exchange may result in low buy-sell activities on the market.
Investor interest, it's mean demand, and don't forget demand will come if the team does its best, no investor will come to inverst their money into a project in which their team is not active, so every project must do its best
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Investor interest, it's mean demand, and don't forget demand will come if the team does its best,
Sure. The team should do their best, then investors will trust to buy the tokens. But you forget something related to my reply above, "choosing a proper exchange to list the token". Do you read it? Have you ever seen people state "when Binance?". This means, people will be more interested to buy when the tokens are listed on the proper exchange as well.
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Well, that's great.
However basically the supply and demand are influenced by the big news around us. Let's see when there is b ig news coming, the market demand and supply will be changing very significantly and pric ewill also depen don them so much.
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In my opinion, what really influences the token price is the news that spreads. If there is good news, the token will usually skyrocket, but if the price drops it means that there are bad rumors about the token. Because the crypto community is still very dependent on the news circulating.
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Generally speaking, a coin or token which has a low circulating supply has more chances that it can be priced higher. Most of us looks at the number of available tokens or coins on the market, and we know that many of the valuable assets now trading are influenced a lot by the numbers. This can be the big reason why some have scheduled burning of coins or tokens to make them more valuable. This is the case of the less, the better. Now, again, we are talking here of the value of each coin and token because even if one has a less value each, but you got a million of them in your pocket the overall value can still be enormous (case in point is XRP).
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It seems to me that the main factor is the interest of investors in the token. Since there will be no investors, there will be no liquidity. And that's a fact.
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Sir everything that you mentioned are great and true. However, the biggest factor ever in everyday project is not the price but the real supporters or known as the community that could push the project unto success. Supply, demands, price aren't the backbone. The real backbone and the biggest factor is the community that gives impact and purpose of demands and Price.
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It seems to me that the main factor is the interest of investors in the token. Since there will be no investors, there will be no liquidity. And that's a fact.
The point is still supply and demand in the market which has a big influence on changes in the price of tokens, many investors are interested, it means that the demand will be high and will be able to increase the token price. Investor interest is of course due to the good news about the token.
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IMO, I believe that in the crypto industry that has full of speculations the factors such as supply and demand, product, and use case might just one of the few reasons that dictate the price of a particular coin/token. Because even the coin or token has not any of that characteristics the price can still be higher than those coin/tokens with real use case products and services offered, as long as you have popularity, great Shiller( ElonMusk) things like that, so for me those factors might not be applicable for all.
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I think of the effects of whales in large manipulations that get markets pumped/dumped abnormally and token prices are just an indicator for whales to buy/sell to make their own profit. I hope that companies that are investing in Bitcoin will not become toxic whales to the market.
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I prefer buying coins with low capitalization and low total supply. Although everything is individual and depends on the perspective of the project, need and marketing.
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There are many reason for token price i think circulating supply is one of them because if token supply will poor of number the price will be reacher. Also there are few another reason like strength of community and so one.
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So far, technologies and other advantages that determine the relevance of the project will not affect the price in any way in my opinion. The price is influenced by trading bots and the desire of an investor to make money. The only exception is bitcoin, the price formation of which is influenced by market mechanisms.
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Even with low circulating supply coins might not really move up if investors don't get involve with the token. This will grow the market capitalisation in terms of liquidity to make the token price
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I think the circulating supply has a major role to play when it comes crypto price increase just like what the article is saying that crypto with low circulating amout, would likely increase in price just like yearnfinance the price is more than the project with big circulating number of token and coins, this can cause delay in the project.
Your right man, Circulating Supply plays a big role in tokens price, cause all my years bounty hunting have come to realize that projects with low capped supply the value of their tokens tend to be relatively high compared to tokens that their supply is high, example dogecoin have over 167 billion in circulation, thats why it's kinda impossible for dogecoin to hit $1.
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The price of any currency or token in the cryptocurrency market affects the interest of investors. If the project is listed on a good exchange then investors are more interested in that token. As a result, token or currency prices continue to rise. And if a project team tries to show the best as the market demands.