What is diluted market cap and how does it affect the value of cryptocurrencies?

3 answers

• Dec 15, 2021 · 3 years ago
  Diluted market cap refers to the total market value of a cryptocurrency, including all the additional coins that could potentially be created in the future. It takes into account not only the current circulating supply of coins but also the potential future supply. This is important because it gives a more accurate representation of the cryptocurrency's value and potential market impact. The higher the diluted market cap, the more diluted the value of each individual coin becomes.
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• Dec 15, 2021 · 3 years ago
  Imagine you have a pizza and you cut it into 8 slices. Each slice represents a coin in circulation. Now, let's say there are 8 more slices that could potentially be cut from the same pizza. These additional slices represent the potential future supply. The diluted market cap takes into account the value of all 16 slices, not just the initial 8. So, if the pizza is worth $80 and there are 8 slices in circulation, the diluted market cap would be $160 if all 16 slices were in circulation. This dilution affects the value of each slice, or coin, making it less valuable.
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• Dec 15, 2021 · 3 years ago
  Diluted market cap is an important metric to consider when evaluating the value of a cryptocurrency. It takes into account the potential future supply of coins, which can have a significant impact on the overall value. For example, if a cryptocurrency has a high diluted market cap, it means that there is a large potential supply of coins that could enter the market in the future. This can lead to a decrease in the value of each individual coin, as the market becomes more saturated. On the other hand, a low diluted market cap indicates a smaller potential supply, which can contribute to a higher value for each coin.
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