I’m sure what I’m about to say is nothing new for most people here, but for people who are just joining the space I wanted to make a quick post to discuss market cap.
Too many times I’ve spoken to people who have seen the potential investing in crypto provides. I think it’s very easy to get swept up in napkin math when investing in new coins and thinking “if I buy a hundred thousand coins at .005 and they go to one dollar I’ll have one hundred thousand dollars.”
While the math adds up, you have to consider that in order for a coin to grow the market cap (coin amount outstanding x coin price) has to grow at the same rate. For a lot of these alt coins with hundreds of billions of coins in circulation this is a huge ask. Shiba was a great example of this: a lot of people thought shiba could reach $1 as doge did and plain and simply it could not. Total supply of shiba is 550 trillion coins so you would need a market cap of $550T to reach this price.
Again, I’m sure none of this is new for most experienced investors here but newbies please take note. I like to look for coins with around $1-5B in market cap and a similarly sized total supply. This gives me a reasonable expectation of growth as well as a basic understanding of my price targets. This simple consideration has served me well on my crypto journey and I hope it can help you too!