Market cap is often used as a metric of importance in the crypto industry. Communities will react jubilantly as their preferred coin moves up the rankings. People will often invest in the top X coins based solely on their market cap as they think it is representative of a diversified portfolio. However, is market cap the right metric to focus on?
Also read: Coinbase Acquires Cryptocurrency Surveillance Company Neutrino
In this post I will explore the fallacy of market capitalization. I will look at the methods with which market cap is often determined and why it could be considered flawed for a number of reasons. I will also touch on other potential metrics which could be more representative of “value.”
But first, let’s start with some basics…
Recap on Market Cap
Market capitalization is a concept that…