fbpx
The Daily Chain
No Result
View All Result
  • News
    • All News
    • Assets
    • Bitcoin
    • Business
    • Editor’s Picks
    • Technology
  • Markets
    • Market Updates
    • Live Cryptocurrency Market Prices
    • Press Release
  • Features
    • Articles
    • Opinion
    • Interviews
    • Quiz
  • Education
    • Blockchain
    • Trading
    • Investing
    • Safety
  • Media
    • Video
    • Podcasts
  • Reviews
  • Asset List
  • News
    • All News
    • Assets
    • Bitcoin
    • Business
    • Editor’s Picks
    • Technology
  • Markets
    • Market Updates
    • Live Cryptocurrency Market Prices
    • Press Release
  • Features
    • Articles
    • Opinion
    • Interviews
    • Quiz
  • Education
    • Blockchain
    • Trading
    • Investing
    • Safety
  • Media
    • Video
    • Podcasts
  • Reviews
  • Asset List
No Result
View All Result
The Daily Chain
No Result
View All Result
Home Investing

What gives a cryptocurrency value?

Alex Aves by Alex Aves
11th July 2020
3 min read
0
What gives a cryptocurrency value?
0
SHARES
0
VIEWS
FacebookTwitterLinkedinTelegramEmailWhatsapp

Value is the perceived worth or importance of something. In terms of a digital asset, the value refers to the price one would be willing to pay to purchase an asset. But what gives a cryptocurrency value?

In cryptocurrency value is an interesting subject because price volatility is through the roof. Compare the chart of any cryptocurrency to any traditional stock and you’ll instantly notice the difference. Crypto will have larger, much more frequency price swings. 

This means that the value of the cryptocurrency is fluctuating a lot. The bottom line is that the value is the market price – what someone is willing to pay. But this value is derived from a number of characteristics that contribute to the overall valuation of a cryptographic asset. Let’s take a look at some of them.

Supply

The overall value of an asset is affected by the amount available. The market cap of an asset represents the total value of all assets available, which is simply calculated by multiplying the price by the circulating supply. 

Supply is a delicate thing because the more of something there is, the less value each unit will be worth. However, the overall valuation (or market cap) should remain the same because in theory the total valuation hasn’t changed, just the supply has. 

Therefore, if the supply of an asset were to increase, such as when tokens are unlocked, the price per asset would be expected to decrease in some proportion to the amount unlocked. Similarly, if the supply decreases, perhaps due to a token burning, one may expect the price per asset to increase as the supply falls. 

Liquidity 

The availability to purchase or sell an asset is the liquidity of an asset. If you have an asset that you are unable to quickly sell and turn into cash, the asset is deemed illiquid. 

Liquidity doesn’t determine value per se, but illiquid markets can be inflated to mislead investors and traders and create fake value. When markets are illiquid it doesn’t take much buying power to move the market. If a malicious trader moves a market upwards they can make an asset seem like it is more valuable than it is. 

In a different vein, some traders and investors view liquid assets are fundamentally more valuable than illiquid assets because they can be quickly turned into cash if necessary. 

Fundamentals

A fundamental is any building block that contributes to the creation and worth of an asset. There are many different fundamental building blocks including: the founding team, the target market, the product, the progress, the revenue and many more.

Traditional investors use fundamentals almost exclusively to value assets before they purchase. You should learn how to do fundamental analysis if you want to start finding the value of assets.

Here’s how to get started with fundamental analysis.

Congratulations! Now you know what gives a cryptocurrency value.

Tags: education
ShareTweetShareShareSendSend
Alex Aves

Alex Aves

Alex is a crypto enthusiast that has been enthralled with the crypto space for over two years now.

Related Posts

LCX Launches DeFi Trading Terminal
DeFi

Advanced Practical Applications of Decentralized Finance: Getting Started With DeFi, Part 2

2nd October 2020
DeFi

Getting Started With DeFi: The Practical Application Guide (Part One)

2nd October 2020
Where are we in the crypto market cycle?
Articles

Where are we in the crypto market cycle?

19th August 2020
Bitcoin Price Records Organic Growth While ETH Could Correct Lower
All News

Bitcoin Price Records Organic Growth While ETH Could Correct Lower

8th August 2020
What is Uniswap and how does it work?
Investing

What is Uniswap and how does it work?

3rd August 2020
What is a crypto bubble?
Investing

What is a crypto bubble?

10th July 2020
Next Post
Is cryptocurrency safe?

Is cryptocurrency safe?

The differences between public and private blockchains

The differences between public and private blockchains

Please login to join discussion
  • All News
  • Editor's Picks

SEC’s exam division releases ‘risk alert’ – highlighting concerns around regulatory compliance

Chinese Police issue warning about CBDC scam promising access to $186M Government Fund

Nicolas Maduro says a digital currency “surprise” is coming

Will SEC Investigate Elon Musk’s Impact on Dogecoin?

BTC Price Eyes Worst Weekly Slide since March Of 2020

Join our newsletter!

Enter your email to receive our newsletter.


Don’t worry, we don’t spam
ADVERTISEMENT

Popular Posts

  • ‘Crypto for Congress’ initiative to send $50 of BTC to US Congress members

    Whale Alert flags over 13000 BTC moved off Coinbase

    0 shares
    Share 0 Tweet 0
  • Coinbase publicly reveals it has held Bitcoin on its Balance Sheet since 2012

    0 shares
    Share 0 Tweet 0
  • Bitcoin sold as low as $6,100 due to a Glitch – Crypto Exchange demands it back

    0 shares
    Share 0 Tweet 0
  • MIT announces 4-year project that seeks to strengthen the Bitcoin Network Security

    0 shares
    Share 0 Tweet 0
  • Canadian Bitcoin ETF attracts over $400mln in investments in 48 hours

    0 shares
    Share 0 Tweet 0

Market Updates

BTC Price Eyes Worst Weekly Slide since March Of 2020

BTC Price Eyes Worst Weekly Slide since March Of 2020

26th February 2021
BTC Market Endures Bias Conflict: Why BTC Prices are Wobbling Around $50K

BTC Market Endures Bias Conflict: Why BTC Prices are Wobbling Around $50K

25th February 2021
CoinShare Lists an Ethereum Traded Product on SIX Swiss Exchange

CoinShare Lists an Ethereum Traded Product on SIX Swiss Exchange

24th February 2021

Media

hashoshi-alts (2)

Altcoin Season Picks / Projects with Huge Potential

9th September 2020
cardano-ADA

Hashoshi: Cardano Shelley is live… but what’s next is WAY BIGGER

19th August 2020
hashoshi-alts

Hashoshi: Low Cap Alts you need to be watching in 2020

5th August 2020
fomohunt-podcast

FomoHunt Podcast – Joe Vezz & Jon Farjo: Tracking Social Sentiment Waves with Lunar Crush

30th July 2020
ethereum-hashoshi

Hashoshi: Ethereum 2.0, Chainlink, Bitcoin Price, and more!

27th July 2020
fomohunt-podcast

FomoHunt Podcast – Joe Roets: Behind the scenes of “Open source money”

24th July 2020
The Daily Chain

The Daily Chain is a news platform and educational hub founded in January 2019. We are dedicated to providing unique and informative daily content across all facets of the blockchain and cryptocurrency industry whether it be news, opinion pieces, technical analysis, reviews, interviews, podcasts and more.

LEARN MORE »

Recent Posts

  • SEC’s exam division releases ‘risk alert’ – highlighting concerns around regulatory compliance
  • Chinese Police issue warning about CBDC scam promising access to $186M Government Fund
  • Nicolas Maduro says a digital currency “surprise” is coming
  • Will SEC Investigate Elon Musk’s Impact on Dogecoin?

Information

  • About
  • Contact
  • Site notice
  • Risk Warning
  • Privacy Policy

Categories

  • News
  • Markets
  • Features
  • Education
  • Media
  • Reviews

TheDailyChain © 2020. The Home of Digital Assets

No Result
View All Result
  • News
    • All News
    • Assets
    • Bitcoin
    • Business
    • Editor’s Picks
    • Technology
  • Markets
    • Market Updates
    • Live Cryptocurrency Market Prices
    • Press Release
  • Features
    • Articles
    • Opinion
    • Interviews
    • Quiz
  • Education
    • Blockchain
    • Trading
    • Investing
    • Safety
  • Media
    • Video
    • Podcasts
  • Reviews
  • Asset List

TheDailyChain © 2020. The Home of Digital Assets

At The Daily Chain, we are committed to protecting the personal data of our audience.
In light of the General Data Protection Regulation, we are asking our audience in Europe to consent to the use of cookies by The Daily Chain and its partners to continue to our site. These cookies are used to personalize your user experience (content and ads) and support and improve the site. Please click “I Agree, Continue to Site” below to consent to the use of this technology and continue to TheDailyChain.com. Visit our Privacy Statement to learn more. Cookie settingsAgree, continue to site
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are as essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

bitcoin
Bitcoin (BTC) $ 44,791.00 7.08%
ethereum
Ethereum (ETH) $ 1,350.65 11.27%
cardano
Cardano (ADA) $ 1.20 10.05%
tether
Tether (USDT) $ 1.00 0.60%
binance-coin
Binance Coin (BNB) $ 207.25 12.09%
polkadot
Polkadot (DOT) $ 30.91 10.06%
xrp
XRP (XRP) $ 0.411927 7.16%
litecoin
Litecoin (LTC) $ 158.32 11.35%
chainlink
Chainlink (LINK) $ 24.27 5.94%
stellar
Stellar (XLM) $ 0.404252 1.33%
Newsletter

Join our newsletter!

Enter your email to receive our newsletter.

Don't worry, we don't spam