Question about MarketCap and Cashing Out

BitHodler

legendary

Activity: 1526

Merit: 1179

Quote from: CryptoBry on December 22, 2019, 06:14:56 AM

You see, a single BTC transaction is just a drop in the ocean and will not in any affect the movement of the price of Bitcoin unless you can also be influencing many thousands of people to be doing the same, even then I still have a big doubt of its influence in the total global Bitcoin market.

When the mass starts selling or buying, you can be sure that the market will respond to that. Technically speaking, there only need to be one large player selling/buying and bots on other exchanges will very likely replicate that move.

Nowadays most projects print as many tokens as possible because they know it's the only way to get a high market cap. It says little about their liquidity, but it's a convenient aspect that helps get noobs excited because they pay attention to that.

CryptoBry

sr. member

Activity: 1008

Merit: 355

Quote from: QEHedge on December 19, 2019, 10:07:18 AM

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?

Certainly, Bitcoin can go down to that level IF there is only one transaction for that specified day and it happened to be your transaction. You see, a single BTC transaction is just a drop in the ocean and will not in any affect the movement of the price of Bitcoin unless you can also be influencing many thousands of people to be doing the same, even then I still have a big doubt of its influence in the total global Bitcoin market.

el kaka22

legendary

Activity: 3654

Merit: 1165

www.Crypto.Games: Multiple coins, multiple games

The marketcap is not what you trade but it is how much bitcoin is worth in the eyes of the public. There could be only a single satoshi sold at 100 thousand dollars and nothing else (no sale above or below after that) and that would mean each coin worth 100k.

If you sell your bitcoin for 95 thousand dollars that means the price of bitcoin is 95 thousand dollars and market cap is arranged like that, however as soon as the next person buys bitcoin for 100 thousand dollars it will go up, the price is whatever the latest sale price of bitcoin is, whoever bought bitcoin the most recent (usually bitcoin is sold every second multiple times so it doesn't take time) that is the price of bitcoin at that current moment.

Marketcap is always calculated with most recent traded (which includes both buying and selling) price of it.

deisik

legendary

Activity: 3514

Merit: 1280

English ⬄ Russian Translation Services

Quote from: gentlemand on December 20, 2019, 07:40:29 PM

Quote from: QEHedge on December 19, 2019, 11:45:54 AM

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

Not to my knowledge, or at least not a commonly adopted standard. Anyone got any ideas?

Trading volumes are a by far better metric

Indeed, we don't know how much of the reported trading volume is real as in the first half of 2017 (and before that) most of Bitcoin trading volume was fake due to Chinese exchanges showing simply insane figures (like the total supply of bitcoins changing hands a few times a day)

However, if they are pretty close to real, which seems to be the case now, it is in fact a useful metric as it represents the real activity of traders and their interest in a particular coin (Bitcoin is still the preferred choice, though). And trading volumes is not the only pebble on the beach anyway (as there are many others)

Dart18

sr. member

Activity: 1400

Merit: 259

The one you are looking for is the exchange.
You did not went through it.
Because of that there will be no records of what had happened. Someone just sent 1 BTC and circulation will go on without a trace of whatever happened to the buyer and the seller in person.

That still happens by now and the market cap is just the basis of how much bitcoin could be.
If you have traded it with USDT with the use of an exchange then there will be a record.

imstillthebest

full member

Activity: 1638

Merit: 122

Quote from: Polar91 on December 20, 2019, 09:56:02 PM

Quote from: aardvark15 on December 19, 2019, 10:42:53 AM

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.

The case here is the amount he wished to sell which will not be recorded on the blockchain. With that, I don't think the entirety of the market cap will be affected if you are to sell your bitcoin outside of the public ledger which is the blockchian. One other thing to consider if they are selling huge amount of bitcoin and to escape the higher fees with it is to sell the entire account itself to the buyer, which is for me, not really beneficial to the growth of the market and will just exploit vulnerabilities to our identities.

i think every money thrown into crypto are all going to be recorded on the marketcap becaus this is like the overall value of the coins . and i dont think that selling btc outside the chain is possible , that wont be a crypto transaction then . selling huge amount of cryptos can make the market cap grow but make the price of the specific coin dumped . that is what i know about how blockchain work but still , you can correct me if im wrong , i might be missing some points on here .

error08

hero member

Activity: 1036

Merit: 514

Quote from: QEHedge on December 19, 2019, 11:45:54 AM

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 ?

Correct, huge influx of money from institutions could change the market cap if they trade on exchanges, buy so much bitcoin then dump it next week, the price will change significantly, however, the price may differ on other exchanges as the transactions only occur on one exchange, it happens a lot.
I wouldn't really care about market capitalization metric to measure the actual value of bitcoin, simply judge it by the supply and demand on the market, just check it on exchanges.

Polar91

hero member

Activity: 1120

Merit: 553

Filipino Translator 🇵🇭

Quote from: aardvark15 on December 19, 2019, 10:42:53 AM

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.

The case here is the amount he wished to sell which will not be recorded on the blockchain. With that, I don't think the entirety of the market cap will be affected if you are to sell your bitcoin outside of the public ledger which is the blockchian. One other thing to consider if they are selling huge amount of bitcoin and to escape the higher fees with it is to sell the entire account itself to the buyer, which is for me, not really beneficial to the growth of the market and will just exploit vulnerabilities to our identities.

gentlemand

legendary

Activity: 2590

Merit: 3015

Welt Am Draht

Quote from: QEHedge on December 19, 2019, 11:45:54 AM

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

Not to my knowledge, or at least not a commonly adopted standard. Anyone got any ideas?

It's used in stock markets and no one seems to question it but those markets are far less warped, much steadier and only adults are allowed to play. Unlike crypto there's no way of creating a market from nothing and driving it yourself but you can do that a million times a day in cryptoland.

Ultimately though the same thing applies to everything. No way could you sell all the gold in the world and get 7 trillion dollars. The price would collapse until you were giving it away. Jeff Bezos couldn't realise his net worth by selling all of his Amazon stock. There wouldn't be enough buyers at the price it's currently valued at. There's a finite amount of buyers at any price.

zhekinsp

full member

Activity: 882

Merit: 126

★777Coin.com★ Fun BTC Casino!

Quote from: QEHedge on December 19, 2019, 10:07:18 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!

Total market will still exist the same,because the market value for one bitcoin is 100K so you just lost your total profit and the other person made that profits in no time.Actually market cap value is just a crappy calculation as other explained its just the multiply of total mined coins and the last selling market price on any listed exchange which is more high.

clickerz

hero member

Activity: 1414

Merit: 505

Backed.Finance

Quote from: Trela on December 20, 2019, 03:11:45 AM

Quote from: QEHedge on December 19, 2019, 11:45:54 AM

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

Market cap is not the real value used to measure the value of Bitcoin accurately. It is relative and exaggerated.
Liquidity, trading volume, and BTC Dominance are more reliable data, although all three can be fake by third-party sources of information.

I agree with you. I always check their trading volume and also I agree that data are being manipulated by some exchange. I think 95k/100K is not enough to crash the market in my opinion. Though it may affect some time but there are also another person who pushes for the price.

vintages

full member

Activity: 966

Merit: 153

Buying and selling of Bitcoin is just like the normal day buying and selling. While you are selling, someone somewhere is buying the same amount or even more. Just like a trade, so there will be up and down in the chart.

But most importantly, when you want to sell Bitcoin in an exchange, your complete amount which is the 100k will be given. Or else, you know the buyer physically and there is a mutual agreement between you two to pay in certain percentage.

Make a good research on Bitcoin trading to know more.

Cherylstar86

sr. member

Activity: 1484

Merit: 253

Quote from: QEHedge on December 19, 2019, 10:07:18 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!

On my own perception, it may affected for just a while but it will recover it afterwards. Well, on your point about that BTC volume , there are a lot of users who will try a risk and may take a profit just like a give and take unless a very huge amount of volume that may affect on the whole crypto currency community.

jalil_113

newbie

Activity: 3

Merit: 0

hopeful

Quote from: stompix on December 20, 2019, 03:38:00 AM

Unfortunately, you can simply change the market cap by choosing different exchanges...
Just the difference from Coinbase and Bitfinex right now would make the market cap swing by 600 million.
Really useless metric, especially since it is obvious some coins will never be sols as they are lost forever.

I've always wondered why in the world do exchanges put that metric anyway.
So it shows basically nothing important for us users

About OP's question - I think the market works in other way. People decide what price is fair for things (especially when it comes to currencies).
The more people want it - the higher price basically.
Person who buys BTC for 95k will wait until he can sell it for 105k. And all that time while he waits - more people wants bitcoin and price goes up (or the opposite way if BTC lacks popularity)

stompix

legendary

Activity: 2912

Merit: 6403

Blackjack.fun

Quote from: aardvark15 on December 19, 2019, 10:42:53 AM

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.

Try to read and understand before posting.
He clearly said he was selling at -5% the price!

Quote from: gentlemand on December 19, 2019, 11:17:45 AM

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.

Unfortunately, you can simply change the market cap by choosing different exchanges...
Just the difference from Coinbase and Bitfinex right now would make the market cap swing by 600 million.
Really useless metric, especially since it is obvious some coins will never be sols as they are lost forever.

deisik

legendary

Activity: 3514

Merit: 1280

English ⬄ Russian Translation Services

Quote from: QEHedge on December 19, 2019, 10:07:18 AM

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

Market cap is a mathematical abstraction

As you may know, it is simply a product of multiplication of the amount of coins mined so far by their market price. In this way, no matter how much money you take from the market, it is not going to affect the market cap unless your sell order is large enough to change the price. If this is not what you meant, then the market cap is very misleading as it doesn't tell us anything about real liquidity of the market since this is what actually counts

Quote from: QEHedge on December 19, 2019, 10:07:18 AM

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?

If you are selling in the open market, that could affect the price (depending on how much you sell)

Trela

legendary

Activity: 1106

Merit: 1001

The Decentralized TCP/IP Internet Protocol

Quote from: QEHedge on December 19, 2019, 11:45:54 AM

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

Market cap is not the real value used to measure the value of Bitcoin accurately. It is relative and exaggerated.
Liquidity, trading volume, and BTC Dominance are more reliable data, although all three can be fake by third-party sources of information.

mu_enrico

copper member

Activity: 2324

Merit: 2142

Slots Enthusiast & Expert

Market capitalization only acts as an indicator and not to be taken too literally. Economics/finance isn't a "hard science" like physics that you can measure variables with certainty, e.g., gravity 9.807 m/s²

Indicators in finance could help with your investment decision, but it is still an estimation and prone to error.

Food for thought:

Quote from: mu_enrico on November 18, 2019, 04:28:11 AM

I could create an ERC-20 token, let's call it (SHIT) with the total supply of 1,000,000 SHIT and listed it on small exchanges. Then I bought 100 SHIT using $100. Is that mean that the SHIT market cap is now $1,000,000 ?

dunfida

legendary

Activity: 3122

Merit: 1140

Quote from: QEHedge on December 19, 2019, 10:07:18 AM

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!

OTC trades wont count in plus to those transactions outside on any exchange platform.Its really not that ideal to completely rely on CMC price information
yet those numbers are average price in all exchange platforms out there.Okay lets say that youve taken some amounts or bulk numbers of btc on sell
then if its that big enough then it will surely affect overall market price.

o_e_l_e_o

legendary

Activity: 2268

Merit: 18748

Quote from: QEHedge on December 19, 2019, 11:45:54 AM

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

Correct, but that doesn't mean there is 1.7 trillion USD in the market.

Think of it like this. I create a coin that has a supply of 10 million. I then sell a single coin to my friend for $10. My coin's marketcap would now be $100 million, despite the fact that only $10 has changed hands. This is an extreme example, but the same principle applies.

Only a small amount of the bitcoins in circulation are currently being traded or locked up in various orders. Looking at Coinbase Pro right now, the price is $7,156. There are buy orders for 200 bitcoins between that price and $7,058. Lets say sell 200 bitcoins to fulfill all those buy orders. I would take about $1.4 million out of the market. The marketcap (if calculated solely from Coinbase Pro), however, would drop by (18 million * (7156-7058)) = $1.7 billion, so over 1000x as much.

QEHedge

jr. member

Activity: 67

Merit: 6

Quote from: gentlemand on December 19, 2019, 11:17:45 AM

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, 10:30:01 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: 2674

Merit: 403

Compare rates on different exchanges & swap.

Quote from: QEHedge on December 19, 2019, 10:07:18 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

Activity: 1918

Merit: 1728

Quote from: gentlemand on December 19, 2019, 11:17:45 AM

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

Activity: 2590

Merit: 3015

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, 10:07:18 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

Merit: 1352

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 (Read 293 times)