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... but it didn't. The SEC did. XRP has a $40B "market cap", which sums up the crypto mentality in general.
by drchopchop 6y ago
... but it didn't. The SEC did. XRP has a $40B "market cap", which sums up the crypto mentality in general.
- rhacker 6y agoMeh, I don't really get why people think "market cap" is the total valuation of something. If I sold Bob a billion XRP for 1 penny, then I sold Tim 1 XRP for $40, then told Bob not to sell, and Tim can sell his for $40 (because he wants to at least get that much back), then XRP's "market cap" is worth $40 Billion, but in reality it's probably worth $40. I get that there is a lot more money in it than that, but let's be honest about something, if half the people sold Bitcoin tonight - they HAVE to get out today, it's "market cap" would likely go from nearly half-trillion to probably $300M overnight. Even though technically it should only cut in half right?
- arcticbull 6y agoThere's no such thing as market cap for a currency (after all, market caps are measured as a function of currency), but nobody knows what on earth a crypto unit is supposed to be, do or mean, so it gets weird little slices of each finance category.
- boh 6y agoAccording to the SEC, XRP isn't a currency, so it does have a market cap.
- arcticbull 6y agoI understand within the community that opinions vary.
- LudwigNagasena 6y agoThis applies to every market cap? If every Apple stock holder would try to sell it today, the market cap would plummet.
- whatshisface 6y ago>If every Apple stock holder would try to sell it today, the market cap would plummet. This is often repeated but not necessarily true. I don't own a particularly large amount of Apple stock, but if the price dropped even a little bit, and if I knew the drop was due to nothing more than this weird thing where everyone was selling for some reason, I might decide to own more. If aliens sent out a mind control signal that caused every Apple shareholder to start selling, the buyers (whoever they were, maybe the aliens? ;) ) would compete with each other to buy. To give you a concrete example, let's say I am the only owner in the world of a flying car. One day, I decide to sell it. 100% of the owners of flying cars have decided to sell, but the price would clearly not drop to zero! The idea that everyone selling implies the price will drop to zero applies to pure Keynesian beauty contests where 100% of the value is in owning something perceived to be valuable. For currencies that is completely true, but for companies that is less true.
- boh 6y ago> This is often repeated but not necessarily true. This is always true. It doesn't have to go to zero to qualify as plummeting.
- whatshisface 6y agoI would suggest that my flying car example is one where it's not true. Another example would be intermediate industrial products: everyone who has intermediate chemicals is trying to sell them! Everyone who buys them uses them up as fast as they can, which means that at any given moment, virtually every owner of the intermediate industrial chemical is trying to sell it.
- boh 6y agoThe price of stocks decrease if everyone sells them. Your examples are incompatible.
- 6y ago
- throwaway2245 6y agoYour example is collusion/price fixing, and is very illegal. I think no matter what is being traded in most jurisdictions. https://en.wikipedia.org/wiki/Price_fixing https://en.wikipedia.org/wiki/Price_fixing If you remove the collusion, then market cap appears to me to be a fair valuation. If there is a shock to the system and everyone wants to immediately sell (despite previously wanting to hold), I would argue that to be a sudden change in the valuation.
- kqvamxurcagg 6y agoActually this thinking is incorrect, at least for company valuations. You're discussing shares being exchanged for arbitrary random values. In a regulated market prices will always be at the marginal level where buyers and sellers exchange at the equilibrium price. Market cap is only meaningless if the participants in the market are trading at random prices, which they're not. To validate this theory, just look at M&A. Companies get bought at close to or above their market capitalisation every day of the week.
- Denvercoder9 6y agoExcept we're not talking about companies, we're talking about currency. Companies have intrinsic value: they own assets, they produce something of value. Currency does not.
- aplummer 6y agoAre you trying to tell me crypto will not deliver internet 2.0
- lupire 6y agoLook at the market cap of a company in bankruptcy. Assets are a tiny fraction of a going concern's market cap. Facebook's main store of value is eyeballs, which can evaporate quickly.
- GoblinSlayer 6y agoNothing prevents you from selling a company for any price, and sometimes there's disagreement about company valuation.
- arthurcolle 6y agoAJRD was just bought by LMT this week for a 25% premium, as one example.
- lupire 6y agoPeople confuse acquisitions with selloffs. The reason an aquisition goes near share recent share price but a selloffs doesn't, is that an aquisition is new information that someone wants the stock, and a selloff is new information that almost no one does.
- newsclues 6y agoHow can someone track cash inflows to crypto currencies?
- cliftonk 6y agoThis is true for illiquid assets. XRP is a liquid asset, and you could probably move a hundred million dollars or more out of it in a matter of days. That said, it’s always seemed like a scam to me.
- bigbubba 6y agoLiquidity is not binary...