Question about MarketCap and Cashing Out - page 2.

QEHedge

jr. member

Activity: 67

Merit: 6

Quote from: gentlemand on December 19, 2019, 12:17:45 PM

Market cap is a really, really crappy metric but we seem to be stuck with it. It's purely the current price on an exchange multiplied by the number of all mined coins.

You could reduce Bitcoin's market cap by $50 billion by selling a few tens of millions of dollars worth of BTC in quick succession. The price is set by what's on the exchanges and there isn't a great deal on there to meet a giant sell.

Thats interesting , Because i always thought of it like this...

If there is 17M BTC in circulation and BTC price is $100,000USD Then market cap should be... 1.7 Trillion right?

Quote from: ChrisPop on December 19, 2019, 11:30:01 AM

I think you should learn how the markets work. What you have described above is an OTC (Over-The-Counter) transaction which is not on a public exchange, but offline or on an exchange like LocalBitcoins. The market cap of an asset is determined by the product of the last market price and the number of units in circulation. Moreover you're just transfering your asset to another person, you're not really taking away from MC. You can only do that if you have the financial power to change prices like making a huge market order of tens of million of dollars worth depending on the liquidity of the market and the participants.

So recently the market has lost 30-50B in market cap , So i'm assuming that institutions are buying BTC and then dumping it on the market whilst shorting it. If they made a bunch of Fiat Backed Crypto currencies (Through "QE") , Couldn't they just buy up the tokens , Long the price and then Sell the tokens and short it down again? Is that what is happening in the market right now?

Is there a better metric than Market Cap or is this the only metric that is used to measure the actual value of BTC ?

Ucy

sr. member

Activity: 2576

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Bisq is a Bitcoin Fiat Dex. Use responsibly

Quote from: QEHedge on December 19, 2019, 11:07:18 AM

So lets say BTC is worth 100K / BTC

Now lets say that i have 1 BTC , and i wish to sell it to someone and they say "I'll give you cash -5%"

So i take Fiat money , and take out 95k and proceed to send them the BTC.

Would the market cap go down if i took out 95k out of the market cap?

How would anyone know or how would the metrics figure out that 95k has been taken out in cash if i have just sent BTC to someone else?

Thanks everyone!

The price is simply determined by demand and supply. Better still, the buyers and sellers determine the price of Bitcoin.
For example: if there are too many sellers than buyers selling at market price of $10,000 per bitcoin, the sellers will be queued until they find more buyers willing to buy at that price. If the numbers of buyers remain low, some sellers will sell at lower available prices. This data is automatically calculated on multiple exchanges and used to determine the average price of Bitcoin.
So, your transaction will have little effect on the price unless there are many sellers like yourself and less buyers

webtricks

legendary

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Quote from: gentlemand on December 19, 2019, 12:17:45 PM

Market cap is a really, really crappy metric but we seem to be stuck with it. It's purely the current price on an exchange multiplied by the number of all mined coins.
You could reduce Bitcoin's market cap by $50 billion by selling a few tens of millions of dollars worth of BTC in quick succession. The price is set by what's on the exchanges and there isn't a great deal on there to meet a giant sell.

That's true, market cap is hypothetical metric. It has no real application and assessment.
Moreover, market cap depends upon the source from which the value is being scraped and calculated. I may sell 1 or even 1000 BTC to someone for $5 each on Exchange A but it won't affect the market cap if Exchange A is not being considered to calculate marketcap. On the contrary, selling even 0.0005 BTC for $5 on Exchange B will drop the marketcap (although for a fraction of second till another order is executed) if Exchange B's data is being used to calculate Market Cap.

gentlemand

legendary

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Welt Am Draht

Market cap is a really, really crappy metric but we seem to be stuck with it. It's purely the current price on an exchange multiplied by the number of all mined coins.

You could reduce Bitcoin's market cap by $50 billion by selling a few tens of millions of dollars worth of BTC in quick succession. The price is set by what's on the exchanges and there isn't a great deal on there to meet a giant sell.

avikz

legendary

Activity: 3080

Merit: 1500

Quote from: QEHedge on December 19, 2019, 11:07:18 AM

So lets say BTC is worth 100K / BTC

Now lets say that i have 1 BTC , and i wish to sell it to someone and they say "I'll give you cash -5%"

So i take Fiat money , and take out 95k and proceed to send them the BTC.

Would the market cap go down if i took out 95k out of the market cap?

How would anyone know or how would the metrics figure out that 95k has been taken out in cash if i have just sent BTC to someone else?

Thanks everyone!

You need to learn how the market capitalization is calculated.

Let's assume the price of 1 bitcoin is $1000 and there is 500 bitcoins mined till date. So at this scenario, bitcoin's market cap will be,

($1000 x 500) = $500000

It's that simple! It doesn't really matter who is selling or buying bitcoin to whom! So the market cap of any coin is not 100% accurate and sometimes misleading as well!

Hope this helps!

panganib999

hero member

Activity: 1750

Merit: 589

Not really I'd suppose. It was a personal transaction where records were only saved towards the both of you, so I suppose not? It's like how A meetup is different from buying it online. Sides, with the peer to peer transaction right there, Price could be freely changed depending on the seller themselves, so let's say BTC is at $100k and Seller decided to sell at $50k. If transac was a success, I doubt you could say that BTC dropped to $50k there and then, after all, only you two were involved and the money was sent directly to the seller. It's trading, but from human to human, not from market to human.

aardvark15

hero member

Activity: 1008

Merit: 510

I don’t think a sell has anything to do with market cap because there is both a seller and a buyer. You are selling for 100,000 but someone else is buying for 100,000. I think the market cap is based on the value of each Bitcoin which is 100,000 in your example.

dothebeats

legendary

Activity: 3542

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Cashback 15%

No. This is a case of an OTC trade that is not recorded within any trading platform and would, therefore not reflect and complement with the metric. Besides, total msrket cap is a vague representation for the whole of the market and is not really a dependable source of information when it comes to gauging the markets and/or making decisions for your next trades--if the market even helps.

ChrisPop

legendary

Activity: 2310

Merit: 1035

Not your Keys, Not your Bitcoins

I think you should learn how the markets work. What you have described above is an OTC (Over-The-Counter) transaction which is not on a public exchange, but offline or on an exchange like LocalBitcoins. The market cap of an asset is determined by the product of the last market price and the number of units in circulation. Moreover you're just transfering your asset to another person, you're not really taking away from MC. You can only do that if you have the financial power to change prices like making a huge market order of tens of million of dollars worth depending on the liquidity of the market and the participants.

QEHedge

jr. member

Activity: 67

Merit: 6

So lets say BTC is worth 100K / BTC

Now lets say that i have 1 BTC , and i wish to sell it to someone and they say "I'll give you cash -5%"

So i take Fiat money , and take out 95k and proceed to send them the BTC.

Would the market cap go down if i took out 95k out of the market cap?

How would anyone know or how would the metrics figure out that 95k has been taken out in cash if i have just sent BTC to someone else?

Thanks everyone!

Topic: Question about MarketCap and Cashing Out - page 2. (Read 279 times)