Nearly $50 Million of Ether Swiped From South Korean Cryptocurrency Exchange - The Wall Street Journal

Posted: 27 Nov 2019 09:27 PM PST

Nearly $50 million was swiped from a South Korean cryptocurrency exchange, the industry's latest setback as it struggles with problems still plaguing cryptocurrencies and the venues where investors trade them.

Upbit, one of South Korea's largest crypto exchanges, said 342,000 ether coins—worth roughly $49.2 million—were sent to an unidentified crypto wallet Wednesday afternoon. The company revealed the wallet address where the coins were sent and said it reported the incident to South Korean authorities who are investigating...

What is Cryptocurrency Market Capitalization? - CryptoTicker

Posted: 02 Nov 2019 12:00 AM PDT

Cryptocurrency market capitalization comprises a mathematical technique for finding out the value of a cryptocurrency. Some of us think that the price constitutes the value, but the truth is otherwise. For instance, if you are buying a sandwich for $20 which tastes no better than another sandwich of $10. Who knows, maybe the $10 that you pay extra might cost you the risk of food poisoning.

Prices may vary from time to time due to various reasons like news stories, Government actions, and exchanges that also play a major role in a price change. Also, the way that the investor thinks also plays a small role in the price variation.

Market capitalization means a measure of the value of the security. It is the current share price multiplied by the total number of existing shares. Simply put,

The market cap of a company = Total number of existing shares * Current price

Let us consider the following example for better understanding,

Let us assume Acoin currently sells $100.0, Bcoin currently sells $1.0, and Ccoin sells $200.0. There are a total of 10,000,000 Acoins, 1,000,000,000 Bcoins and 10,000,000 Ccoins.

Acoin market cap = 10,000,000 * $100.0 = $1,000,000,000

Bcoin market cap = 1,000,000,000 * $1.0 = $1,000,000,000

Ccoin market cap = 10,000,000 * $200.0 = $2,000,000,000

The value of Acoin and Bcoin are of the same value but Ccoin is twice the value of Acoin and Bcoin.

Interpretation?

From the above information, we get to know the amount of risk involved in the investment. Stocks can be divided into three categories: small-cap, mid-cap, and large-cap. In large-cap companies, the risk involved for investors in low and small-cap companies contains much more risk. Snapshots of company's or cryptocurrency groupings can be obtained by using a market cap. Similarly, it also gives you a figure of the value of the privacy coin space.

Bitcoin size vs Altcoin risk

Bitcoin holds the largest cryptocurrency market cap. It has a circulating supply of over 17,991,725 and a price of almost around $9,000.0.

Bitcoin market cap = 17,991,725 * $9,000.0 = $161925525000 approaximately.

Other crypto coins belonging to the list ranking around 100, generally holds a market cap of around $55,000,000. Investing in these other crypto coins could prove highly risky. The challenge is to find which among these crypto coins will bring more value.

Market manipulation

Market manipulation is another important aspect of the cryptocurrency market capitalization. Small market caps expose themselves more to price manipulation compared to large market caps. Some make use of small market cap coins by controlling the total supply to generate a large price movement in a particular direction.

What do we not know from this information?

Cryptocurrency market capitalization doesn't provide us any future prediction of the price of the coins.
It also doesn't determine the future coin supply.
Few cryptocurrencies cap the total supply of coins while others make am infinite supply.
Market cap doesn't tell us anything regarding the velocity or direction of the coin, like if the coin's growth will increase or eventually decline.

Dead coins

Here is another main factor that influences the market cap. Some investors lose their wallets and some even lose the means to recover their crashed wallet. One source of lost coins are bugs in code. In some cases, hackers steal crypto rendering the user not being able to redeem the coins. Hence, an accurate calculation of the cryptocurrency market capitalization is:

Cryptocurrency market caps = (Total number of circulating coins – Dead coins) * current price

Similar approaches

The market cap approach is a part of the fundamental analysis field of stock market investing. The main motive of fundamental analysis is to compute the value of the company the predict future rewards. It generally involves long-term thinking. On the other hand, the technical analysis concentrates on short term trends and price fluctuation. For example, if a user wants to invest in a cryptocurrency, they perform technical analysis on the cryptocurrency to check if its value skyrockets in a week or so. This is a good short term investment, unlike a market cap.

Conclusion

Limitations to using market cap come up when you notice that it is being used to analyze companies. Even so, cryptocurrency market capitalization offers techniques to provide long term perspectives. Users can invest boldly knowing that the corresponding cryptocurrency is successful in the future and remains valuable. So they can perform technical analysis from time to time to do short term investment and use fundamental analysis techniques like the market cap for doing long term investments.

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Disclaimer: The authors of this website may have invested in crypto currencies themselves. They are not financial advisors and only express their opinions. Anyone considering investing in crypto currencies should be well informed about these high-risk assets.

Currently we are not recommending trading at eToro. A better alternative is Coinbase. However, for old articles please refer to the general risk disclosure on eToro. CFDs are complex instruments and carry a high risk of losing money quickly through leverage. 76% of retail accounts lose money when trading CFDs from this provider.

Posted By

Abishek Dharshan

Abishek is an Entrepreneur, Digital Nomad, Student, and ICO Marketing Manager currently based in Berlin & Champaign. He is actively involved in the Blockchain space and has worked in numerous projects in the Silicon Valley since 2017. His interests revolve around Finance, Consulting, and Blockchain Research.

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