Everywhere you read: The entire market has lost 24 billion dollars. Is that true? A glance at the market capitalization and the question: Why is the Bitcoin rate?

By Phillip Horch
15. November 2018 share Facebook Twitter LinkedIn xing mail

That the price of Bitcoin and the entire Ecosystem are not really performing well, are likely to have noticed the most in the meantime. In the evening hours of the 14th. November the sideways trend was brought to an end: It went down.

In the course of which one reads The entire Ecosystem has lost within a short period of time, many billions of dollars. However, it has the really? And why the Bitcoin fall-rate so rapidly? Can lose the Ecosystem at all “capital”? The simple answer is: no.

Because market capitalization is only an indicative value, the price of Bitcoin, as well as all the other courses together are composed of supply and demand.

phrases like “Bitcoin loses billion in market capitalization”, as if it is in Cyber-Space some (virtual?) Bank, in the money is saved and then any (whales? Cops? Bear?) short-hand steal, and – Presto – the money. But it doesn’t work.

of What market capitalization is, then?

At the risk of repeating: The market capitalization is a pure indicative value. In the traditional financial system, you calculate the market value of a Corporation. The formula is simple:

shares x share price = market capitalization.

The Bitcoin Ecosystem has taken this concept and this arithmetic way. The formula is equally simple:

number of Token x cryptocurrency price = market capitalisation

The leads – especially in the crypto world – to massive inaccuracies. First of all, you have to ask yourself:

How is the Bitcoin rate?

The price of Bitcoin (and all other classes of crypto-currencies) is made up of the factors of supply and demand. So: What someone is willing to pay for something? And What is someone else ready to accept? This also of course results in the end: Our rate pages to obtain the data of various crypto-exchanges and determine the mean value – this is the course that will appear later.

problems with the crypto-market capitalization

This results in various problems. The best example of Bitcoin: no one knows how many tokens actually exist. Some (Many?) for example, are lost forever in the Depths of the Blockchain, because someone lost his Private key or his Mining Computer has brought to the junkyard. For the calculation of the market capitalisation, however, all of the tokens that have been issued will be taken as calculation basis.

Therefore, Ripples XRP is also on some lists and in some place. The Ripple retained XRP tokens are included – or not.

Why is the Bitcoin rate?

As you can see, the calculation of the market capitalisation of a number of factors, which are only indicative values. There is no “parent” invisible crypto-market, which draws arbitrary money and spits out. It is only partly true that investors and traders take your money “from the market”. You only sell your crypto-currencies on the stock exchanges. If many units of crypto-currencies to be sold at once, must be set the deals finally deeper to find a buyer: So the price of Bitcoin falls.