What is the significance of capitalization for the cryptocurrency market?

The volatility of cryptocurrency is not decreasing, which is perplexing to many professional investors. How do they apply traditional economic principles to this extremely lucrative yet unpredictable field?

The simplest and most obvious place to start is market capitalization. Capitalization data is taken from two main sources: Coinmarketcap or CoinGecko. The latter offers several more indicators for evaluating the token in the community and by developers in general. Ultimately, both services provide information about new cryptocurrency receipts into circulation. You can also track data about a specific coin there: for what total amount it was purchased, using graphs you can track the dynamics and trading volume.

But the whole problem is that these indicators will be correct and accurate only if you are dealing with a currency that has been in circulation for a long time. 

If we talk about a currency that has appeared on the market quite recently, then the situation with any kind of forecasting becomes more complicated.

Take, for example, Dentacoin. It currently has a market capitalization of $545 million. Not bad considering the scale of the project. But only 4.5% of the total Dentacoin supply is in circulation. In other words, there are 8 trillion. tokens, but only 325 billion are liquid.

In addition, most of this currency is contained in smart contracts, which will only be put into circulation when certain goals are achieved. Thus, from 2018 to 2044, about 80% of all tokens will be unfrozen and sold. In 2018, 1.9% will be issued, which is equal to 152 billion. 

 In addition, the more tokens are delayed and not allowed to circulate, the higher the likelihood that when investors show interest in them, this will lead to a surge in the percentage value of one token. Which raises its price.  If you notice that the price per unit of a currency has increased significantly in just one day, this is a clear marker of such a scenario.

On the other hand, for investors this means that the coin can fall just as sharply in one day. It's simple: if someone purchased a large amount of currency in a day, this does not mean that it will be sold for the same amount. Because this quantity is not yet liquid. In fact, if the funds immediately become liquid, the market could drop very sharply.

Fortunately, most companies working with cryptocurrency do not do this. They do not abuse the trust of market players..

However, before investing, you need to carefully research the part of the market in which you are going to do it. And this applies not only to the general supply of currency. Capping the market is useful, but it is important to remember the many other factors that can affect cryptocurrency. This is just the beginning, and even the most expensive digital currency can still be artificially controlled by the whales of the ecosystem.

According to https://btcmanager.com