Important knowledge for your crypto investments - Basic, but 95% of crypto investors don't know that

[Venusaur]

This is a very basic information that, I don't know, 95% of people don't know or understand this in a completely wrong way.. Unfortunately many crypto investors completely misunderstand how a coin can pump even with huge marketcaps.

This basic knowledge is: How the hell a large coin pumps? Let's use Solana as an example here.

What 95% people think: Well, the Solana's price is $175. The current market cap is $91B. So, if we want to see Solana reaching a $350 price (the double), we need Solana reaching a $182B marketcap, right? Don't we need to double the marketcap?

NOOOOOO, this is completely wrong. If we use this logic, if we want to see a 2% on Solana's price, we'd need to see over $1.8 billion ($91B - 98%). That's right, using this stupid logic, to just move 2%, we'd need 1.8 fucking billion dollars. Just to move 2%.

But that's the reality...a piece of info that you can easily access and see even on CMC, this is the amount of money required to move SOL price 2% on Binance. $7.6M. Not $1.82B.

So, nope...Solana don't need 91 billion dollars to double its current price. It actually requires waaaaaay lower than that. Something around $1B. This is like 98-99% less than what many people think.

I'm using Solana as a random example, I'm not saying to buy that. Actually, don't buy it. The entry point would be shitty, prioritize a coin that didn't pump yet.

It applies for every coin. Marketcap doesn't work like that. ETH price moved +50% in the last few weeks, it doesn't means that hundres of billions of dollars were invested on ETH.

Why is this dangerous?
Because gurus love to use this stupid and wrong logic to convince you to buy random shitcoins. Hey, don't buy a large cap, because to double the price, you'd need billions of dollars. Instead, buy this shitcoin with $50k marketcap, it's much easier to pump that, we only need $50k. Don't be surprised if that tiny useless coin rugs you. If it has such a low marketcap, there is a reason for that. Those scammers and gurus that run discord servers, youtube channels and telegram signals groups love to keep spreading misinformation about it, it's the base of their 100X videos about buying rugpulls.

Be careful.

 

[Crazy Lucifer]

The argument is flawed TBH. Price moves because of simple supply and demand. I once tried to research how it actually happens and its kind of a deep rabbithole. But what you are saying is mathematically flawed I believe.

 

[Venusaur]

The argument is flawed TBH. Price moves because of simple supply and demand. I once tried to research how it actually happens and its kind of a deep rabbithole. But what you are saying is mathematically flawed I believe.

that's not the point
prices move because of supply and demand

but we don't need as much money entering that coin's market as people usually think, not $1.8B to move 2%, much less than that, that's what I'm saying

 

[Crazy Lucifer]

but we don't need as much money entering that coin's market as people usually think, not $1.8B to move 2%, much less than that, that's what I'm saying

Again, you cannot say this categorically. Suppose you punch a huge order to move the price but if there is a counterparty to match it, price won't move even a bit. Its all probability in action. Nothing can be said for sure. And god alone knows how these price deciding algos are rigged lol.

 

[Venusaur]

Again, you cannot say this categorically. Suppose you punch a huge order to move the price but if there is a counterparty to match it, price won't move even a bit. Its all probability in action. Nothing can be said for sure. And god alone knows how these price deciding algos are rigged lol.

We can say that we need $7.6M net to move the price of the coin by 2%. So if $20M is bought and $13M is sold, it should be almost enough. But it's arguable, maybe a bit more, maybe a bit less, there are other exchanges involved, fair enoguh.

But what I can categorically state with total certainty is that people's mentality is totally wrong and you definitely don't need $2B in liquid cash entering the market to move the price of Solana by 2%. Or $91B in new money to double the price. Same for BTC, imagine if things were like those gurus say? That shit has $2T in marketcap and we don't need 1% of this number ($20B) to move 1% on major exchanges, it's waaaaaaay less than that (estimated $16M)

 

[t0mmy]

I believe the answer you’re looking for is “volume” (supply and demand as Lucifer said) short term for price movement like you’re talking about. Long term and it staying that way will always logically come down to market cap…

It’s like the XRP bros talking about it gonna be $100 any day now, yet still hasn’t broke its last all time from like 2018. I mean it has serious supply and demand yet never does shit, their math doesn’t math and never could imo