CONTROVERSIES AROUND BITCOIN MARKET CAPITALIZATION
Since their origin and creation, Bitcoin Motion have caused a stir in the financial market, so much so that they have diversified investments by turning them into digital ones.
There are endless platforms that offer digital currency exchange services. Thanks to them, the commercialization and operation of cryptocurrencies are possible.
The fact that more and more people are joining this financial investment scenario brings great significance: cryptocurrencies are positioned. They have already captured a significant level of the market.
Let’s talk about capitalization.
In straightforward language, it is relevant to know the meaning of the term MARKET CAPITALIZATION; this refers to the number of units that have been extracted from a particular cryptocurrency.
This amount, in turn, is taken to the value of currencies of traditional use or known as Fiat currencies, thus achieving a real deal compared to the conventional financial market.
The process of extracting cryptocurrencies is known as MINING. Through the solution of mathematical calculations and logarithms, it is possible to remove a particular digital currency.
All cryptocurrencies are different when they are extracted, so the people in charge of carrying out this process are known as miners and receive a bonus fee for solving these mathematical problems.
Find the value of the market capitalization of a particular cryptocurrency by multiplying the number of units extracted by the value of a currency, be it a dollar, euro, or another.
Through market capitalization, we can even determine the position of a cryptocurrency and, of course, the stability that it can have.
It is no secret that cryptocurrencies are victims of excessive volatility, but this does not limit them from being highly profitable assets in the long term.
The cryptocurrency to date with the largest market capitalization is Bitcoin, but this does not make it exempt from suffering the effects of volatile supply and demand at any given time.
Cryptocurrencies with lower market capitalization indicate that they can generate profits and incalculable losses, which is why they are more vulnerable to the movements and whims of the market.
According to specialists in economics and statistics, there are two ways of seeing market capitalization; one is based on the current supply, which is nothing more than the number of units extracted to date and that have been effectively marketed.
On the other hand, the utterly diluted offer refers to the number of units of a particular cryptocurrency that will be mined, that is, what the WHITE PAPERestablishes in units of digital currency.
Suppose we exemplify those mentioned above in the case of Bitcoin to date. In that case, its circulating market capitalization is almost 595 billion dollars, and the fully diluted market capitalization is 655 billion dollars.
What is market capitalization for?
When investing in any financial asset, be it traditional, such as stocks or options, or in the case of the digital financial market with cryptocurrencies, you must be informed before taking an important step.
Investments require analysis and prior study. Decisions should not be made adrift, or at first, glance, because luck is considered to be on our side; this is a completely wrong position.
Market capitalization can be considered a reference indicator before investing because through it, we can compare the various crypto active options offered in a certain period.
The market capitalization is subdivided according to the type of cryptocurrencies and can be classified as follows:
- High market capitalization: they are cryptocurrencies considered stable whose liquidation at the time of buying or selling them is pretty circulating, and the margin of monetary value is more significant than 11 billion dollars.
- Medium market capitalization: although it is made up of cryptocurrencies that may be in an untapped margin compared to their potential, they can be risky; the value of their capitalization must be between 1000 and 10 billion dollars
- Low market capitalization: They are the most vulnerable digital currencies and susceptible to drastic changes. They are not considered profitable.
There is much news that arises around Bitcoin. Still, this cryptocurrency has shown a stable position over the years, which is demonstrated by its market capitalization.
It may be going wrong, but insurance profitability will be long-term in 2022.