Cryptocurrency with the potential to rise faster to the moon is all investors are looking for. Selecting such coins has been a constant headache to investors, especially the newbies, and this article will walk you through a few basic things to not overlook.
Following the recent bull run of Bitcoin and some selected altcoins, the sense of investment of many people has been awakened. Bitcoin has staged an impressive comeback and some of the Altcoins are doing well as well. Sadly, critics in most cases try to link any cryptocurrency that begins to do well especially Bitcoin to the Dutch Tulip Mania. This creates fear and become challenges investors should overcome.
To many enthusiasts, Bitcoin is far gone, and to get a fraction of it is not in their book. Hence, they have to flip through thousands of cryptocurrencies to find an equally potential coin to buy and to diversify their portfolio. The mistake they end up making is buying cryptocurrencies or tokens with less than 5% success rate. As an investor, I rate the success rate by how fast a coin responds to change.
It is worth noting that some coins rise faster than others. Though the less fast-rising ones have impressive price stability, I will go in for the more fast-rising ones since that is what every investor is looking for (Buy them cheap, sell them high).
To find a cryptocurrency that has the potential to rise faster to the moon, there is one crucial thing to check about the coin before adding them to your portfolio, and one more thing to not overlook which has been stated at the last paragraph of this article.
1. Available Supply (Most Important Factor in determining cryptocurrency Potential)
Yes! Available supply is one of few ways of finding a cryptocurrency with the potential to rise faster. Available supply, according to CoinmarketCap, is the approximate number of coins available in the market.
To prove that the available supply is one important factor to determine how fast a coin may rise, I will give you an example.
Bitcoin has an available supply of 17 million, Dash has an available supply of 8 million, Bitcoin Cash has an available supply of 17 million, Bitcoin SV has an available supply of 17 million, Litecoin has an available supply of 61 million, Ethereum has an available supply of 106 million, Monero has an available supply of 17 million, Zcash has an available supply of 6 million, Bitcoin gold has an available supply of 17 million and the list goes on.
You can check any cryptocurrency that is trading around $90 or above. They all have less than 200 million available supply.
Why does Available Supply Matters in Determining Cryptocurrency Potential to Rise?
Because available supply is used to calculate the price of an asset, it becomes an important factor in determining the potential of a coin. The price of a cryptocurrency is calculated by dividing the market capitalization by the available supply. Price = Market Cap÷ Available supply.
Since the Available supply is the denominator, the figures for market cap have to be equal to the figures of available supply for the coin to trade at $1. This means, the smaller the available supply, the faster it is for a coin to trade at $1 as long as the market cap keeps rising.
Some coins have an incredible market cap but are still trading less than a dollar. Why? Because the available supply is large.
Do you wonder why XRP is ranked 3rd on the coinmarketCap rankings with a market cap of $18 billion, but trading below $0.5 whiles Dash is trading at over $160 with a market cap of mere 1 billion? We can say that XRP is doing well than Dash in terms of market capitalization, but Dash investors are having their investment rising faster.
The secret lies in the available supply. XRP has an available supply of 42 billion while Dash has an available supply of just 8 million. As I pointed out earlier, the market cap has to be equal to the available supply for a coin to reach a dollar. When it doubles the available supply, it trades at $2, and so it goes. The market cap of XRP has to reach 42 billion before it trades at $1. Assuming XRP had the available supply of Dash, which is 8 million; XRP would be trading close to $2500.
Note: Use current figures when trying this out.
The XRP price= Market Cap÷ Available supply.
XRP Price = 18 billion ÷ 42 billion.
XRP Price = $0.42. (Note: To get the exact price, use all the numbers in the market cap and the available supply. I just used an approximate that’s why I missed it but points.)
The Litecoin Price = Market Cap ÷ Available Supply.
Litecoin Price = 7 billion ÷ 61 million
Litecoin Price = $114.
Can XRP ever reach $100?
From the calculation, we can tell that XRP needs a market cap of $420 billion to reach $10. With that market cap, Litecoin would be trading around $6800 while Dash would be trading at around $52500.
In reality, XRP can hit $420 billion market cap to trade at $10, but to trade at $100, it needs to do the impossible. Maybe not anytime soon.
In this case, don’t hold just one XRP and hope to be a millionaire. Maybe you need to buy a bunch of them to hit the jackpot when it reaches that price height.
Though the available supply is very important here, it takes some factors to trigger the market cap to rise to have a good reflection on the price. Bitcoin will undergo a halving event and just as the previous ones, the market cap would rise and would cause an insane bull run of the price.
What this means is that first, there should be a good available supply (a supply that makes sense) and second, there should be a rising market cap.
In investment, the available supply matters. The smaller the available supply, the more potential the cryptocurrency have to rise faster to the moon. The larger the available the supply, the slower the price rises, and the more you need to buy that coin to hit the jackpot. It is essential to understand that any coin that rises so fast also fall so fast, but that is normal in the industry.
Apart from Available Supply?
Okay. Apart from the available supply, the other thing you should pay attention to is the team behind the coin. Check from their social media pages to verify whether they are still active or have given up on the coin. If the team is still active, I will advise you to buy more, especially when the price is low. Remember that Bitcoin was once trading at $0.5.
A working team ensures that more development is considered to get the vision across to a wider audience. Bitcoin, for instance, undergoes constant innovation and even now, it is possible to send and receive Bitcoin using WhatsApp Messenger.