understand key delivery metrics

As an introduction, I would like to point out that all the data below can be found with all cryptocurrency data providers. Here we take the most famous one: CoinMarketCap.

Circulating supply

This is to identify how many units (tokens) of a particular cryptocurrency are currently in circulation. Taking Bitcoin as an example, there are currently more than 19,000,000 bitcoins (tokens) in circulation (19,042,425) out of a total supply of 21,000,000, or 91% of the total supply.

Circulating supply Bitcoin

This indicator allows us to understand what the current token supply is and the potential future scarcity of a cryptocurrency. For example, I wouldn’t feel comfortable if the circulating supply were only 15%, that would mean supply will increase by 85% in the future, which inevitable for repercussions to put pressure on the price. Bitcoin’s cryptographic code predicts that there will be only 21 million units and no one will be able to make more bitcoins. For example, the supply of bitcoins is capped, which partly characterizes its scarcity. This is of course not the case with a large number of cryptocurrencies.

For example, if we take dogecoin:

Circulating offer Dogecoin

There are 132 billion dogecoins in circulation. You can easily make comparisons with other crypto assets.

Max supply (the maximum number of tokens that will be there)

If for Bitcoin the maximum supply is 21 million, some cryptocurrencies do not have a unit limit, which has the effect of displacing this aforementioned idea of ​​scarcity.

Max offer Bitcoin

Take the example of the dogecoin to compare:

Max offer Dogecoin

There is no Max Supply, in other words there is no ceiling to reach in terms of dogecoin units.

For the record, when dogecoin was created in 2013, it was expected to reach a maximum supply of 100 billion units. But soon the teams agreed not to limit the maximum supply and let unlimited dogecoin happen. Every minute, every time a block is mined on the blockchain, 10,000 dogecoins are created, as a result of which the money supply in circulation is constantly increasing. Here the notion of rarity pales in comparison. As a reminder, the dogecoin was created as a joke to make fun of cryptocurrencies.

Market capitalization

In traditional financial markets, market capitalization represents the value of a company. We can calculate it simply by taking the number of shares in that company and multiplying it by the share price. In the cryptosphere, the approach is quite similar. The Market Cap is the value of the cryptocurrency in the market and is obtained by multiplying the current price by the circulating supply. For bitcoin it is quite simple:

Market capitalization Bitcoin

Offer in circulation: 19,042,425 BTC

Current price: $30,000

Capitalization = 19,042,118 x 30,000 = $571 billion (571 billion)

It is generally a good idea for any cryptocurrency to have a large market cap as it means that the cryptocurrency or company issuing a cryptocurrency has many investors. But market cap is important as a relationship between price and circulating supply, because a token with a very large circulating supply usually has a small price per unit.

A high price and a low circulating supply resulting in a high market capitalization is the ideal combination. Bitcoin is the perfect example.

Fully diluted market cap (current price x maximum stock)

It is simply the Market Cap when all the tokens will be in circulation. For example, for Bitcoin, when the 21 million bitcoins are mined (we estimate this phenomenon will occur in 2140), we will obtain the fully diluted market cap. It is a projection of the Market Cap with all the tokens in circulation.

Fully Diluted Bitcoin Market Cap

Calculating Fully Diluted Market Cap:

21,000,000 x $30,000 = $632,000,000,000 ($630 billion)

For dogecoin, since there is no token cap, the Max Supply = Fully Diluted Market Cap is:

Fully Diluted Market Cap Dogecoin

Let’s end with trading volumes.

Volume

Similar to traditional financial markets, trading volume is the number of shares traded in the market, in cryptosphere trading volume is the amount of cryptocurrency traded (bought or sold).

A large trading volume for a particular cryptocurrency is beneficial as it lends some credibility to the asset. This indicates that a large number of people are positioning themselves to buy and sell this cryptocurrency. In other words, it is liquid.

Bitcoin volume

The amount of this volume can of course fluctuate depending on the demand for a cryptocurrency. Here for bitcoin, we can see that $29 billion has been traded in the last 24 hours, down 14.65% from the previous day. You will be able to observe fluctuations of several thousand percent on some recently injected cryptocurrencies, but be careful, you will find that the volume count is very low.

For example, if a newly created cryptocurrency shows a volume of $10,000 and suddenly, through manipulation, a group of shady traders moves it to $50,000, the change in volume will naturally turn into +500%† This will have the effect of attracting crypto curious. But on closer inspection, $50,000 represents a small volume next to bitcoin’s $29 billion dollar volume. There is a good chance that with such small cryptocurrencies with low volumes (in dollars) but with strong variations, it is generally a matter of manipulation that leads to liquidity problems.

These indicators, which are easily accessible on a large number of data provider sites for all cryptocurrencies, are a first reading grid in the analysis of crypto assets. In short, a limited circulating supply combined with a relatively low ceiling for units in circulation (max. supply) are the first indicators of scarcity. A high capitalization (Market Cap) in combination with a high trading volume indicates a relatively high demand for the asset in question.

In this article, the goal was to see and interpret the most important indicators that you regularly see in front of your eyes. I’ll make up an article for you that pushes the plug a little further into the reading grid to determine whether the asset in question is inflationary or deflationary. Between cutting token issuance and burning tokens, the cryptosphere is full of must-have crypto techniques to master when it comes to investing. Very quickly to be found in the columns of Zonebourse.

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