How to Predict the Price of Crypto Using Simple Math

How to Predict the Price of Crypto Using Simple Math

Cryptocurrency | 8 minutes to read | 06.12.2022
TL;DR Crypto prices can be "predicted" using simple math, circulating supply, and market cap. The price can be calculated by dividing market cap by the number of coins in circulation. This method can be used to see the price of any cryptocurrency at any market cap, and any market cap at a certain price. If you believe your coin can hit a certain market cap, you can easily find the price the coin would be.
Playing around with crypto prices is pretty fun. You sit there on your calculator app and daydream “if my coin could only hit so and so price, I’d finally be able to buy a house!” But your hypothetical price might not be realistic or possible for your specific cryptocurrency. It’s important to be able to make a good prediction of the crypto’s possible future price. Today, you will learn how to calculate the price of a cryptocurrency using some pretty simple math. This can help you when trying to decide if a crypto is worth investing in.

Using market cap to predict prices

Market cap is important when it comes to being able to estimate what the price of a certain crypto can be.

What is market cap?

The definition of market capitalization is the total value of a blockchain’s cryptocurrency. You can find market cap by multiplying the circulating supply of the crypto with the current price per coin.

What is circulating supply?

Circulating supply is the amount of coins or tokens that have been issued to use on the blockchain. For example, Bitcoin’s current circulating supply is a little over 19 million. That means only these 19 million coins can be traded around to the users. For Bitcoin, mining is the way to introduce new coins into the circulation supply. Usually the higher the circulating supply, the lower the price per coin, and the lower the supply, the higher the price.

What is max supply?

Max supply is the total amount of coins or tokens that will be issued in the blockchain's entire lifetime. Some cryptocurrencies, like Ethereum, don’t have a max supply, which means they will keep creating Ethereum tokens as long as the blockchain keeps running. Other cryptocurrencies, like Bitcoin, have a set max supply, which means that there will only ever be a certain amount of coins created. There will only ever be a total of 21 million Bitcoins. This is important for being able to determine what the price of a coin will be in the future. A crypto with no max supply is inflationary, which means its price could go down over time. As more supply is introduced the price per coin at the same market cap will decrease. For example, a crypto has a $2,000 market cap. If there are 1,000 coins, then the price per coin will be $2. However, if there are 2,000 coins then the price of the crypto will be $1 at the same market cap. So, the price can only stay the same if demand for the crypto keeps increasing. If a crypto’s demand increases with a set max supply then the price of per coin can only go up because the amount of coins will never change.

The formula to determine price and market cap

If you want to find a market cap of a crypto you can multiply the number of coins in circulation by a price. If you want to find the price of a crypto you can divide the market cap by the number of coins in circulation. So now that you know the formula you can actually see the price of your crypto at certain market caps, and you can see the market cap of your crypto at certain prices. You can use this to "predict" the price or market cap. Predict is in quotes because no one can really predict the price of crypto because that’s determined by the market and who knows what the market will do. For example, if you believe your coin can hit a $100 billion market cap, you can plug that number in and divide by the number of coins to see the potential price of your crypto at that market cap. You can also use the crypto’s max supply to see what it could be worth when all of the coins have been issued. Bitcoin currently has a market cap of $551 billion and a circulating supply of 19 million making each Bitcoin $29,000. If Bitcoin’s max supply were already circulating then each Bitcoin would only be worth about $26,000. It’s important to keep that in mind while trying to predict the price of crypto.

Here are some examples of using math to predict the price of crypto

Disclaimer: Now this is just fun speculation and should not be taken seriously. No one can predict the price of any crypto. This is just some fun with math combined with a little of my own theory and opinion which is probably different from many of yours. So take this with a grain of salt and use it to learn another's perspective on the future of crypto.

Crypto and gold

The current market cap of gold is 12 trillion dollars. The current market cap of cryptocurrency is about 1.14 trillion dollars. If crypto were to get to gold’s market cap it would be worth about 10.5 times larger than it is currently. If we were going to use this ratio (10.5) we can find the market cap and prices of crypto if the market was exactly how it was now except it had gold’s market cap. For example, Bitcoin would go from being worth $29,000 with a market cap of $551 billion, to being worth about $304,500 per coin with a market cap of 5.785 trillion dollars. Ethereum would be worth about $16,000, up from $1,535, with a market cap of $1.953 trillion, up from 186 billion dollars. Cardano’s price would go from $0.55 per token to $5.78 per token, and its market cap would grow from $18.85 billion to $197.9 billion. Polkadot would increase its price from $8 to $84 per token, and its market cap would increase from $8 billion to $84 billion. Algorand would go from a price of $0.34 per token to $3.57 with a market cap going from 2.4 billion dollars to 25.2 billion dollars. It will be interesting to look back at this in a decade or two if crypto does hit the market cap of gold to see if these cryptos lost, stayed steady with, or beat the ratio of 10.5 times.

Ethereum Killers

There are so many Ethereum “killers” out there. These types of cryptocurrencies allow developers to build apps on them, and some claim that they can surpass Ethereum, which has the second highest market cap at $186 billion. At its all time high Ethereum had a market cap of 549 billion dollars. Let’s see what happens if we replace some of these crypto’s market cap with Ethereum’s market cap. Cardano currently has a market cap of 18.85 billion dollars, so it would increase about 9.87 times to reach Ethereum’s market cap. At this market cap Cardano’s price would be $5.42 per token. At ETH’s all time high, ADA would be worth $15.95 each at that same market cap. Solana has a market cap of 11.6 billion dollars right now, and needs to increase about 16 times to get as big as Ethereum. That would put Solana’s price at $539.52 per $SOL. If SOL could reach the all time high market cap of $549 billion, it would be worth around $1,595 each. Polkadot has a market cap of $8 billion currently, and has to increase by 23.25 times to match Ethereum’s market cap. Each $DOT would be worth around $186 if it can reach this market cap. $549 per DOT at Ethereum’s highest market cap. Avalanche currently has a market cap of about $5.6 billion, and would need to increase 33.2 times to reach Ethereum. This would put the price of each AVAX token at $659 each. At the highest market cap of Ethereum, AVAX would be worth $1,946 each. Algorand has a market cap of $2.4 billion right now. That means to reach Ethereum’s market cap it would have to increase by 77.5 times. At this market cap, each $ALGO would be worth $26.35 each. At the all time high, each ALGO would be worth $77.77 each. Keep in mind, these prices are only using the current circulating supply, and since it will probably take years, at least, to reach Ethereum’s market cap, if even at all. By then there will be a lot more tokens circulating than there are currently. Summary You can “predict” the price of a crypto at a certain market cap by dividing the market cap by the number of coins currently circulating. Using this method you can see the crypto’s market cap at certain prices and vice-versa. For example, if we want to see what Bitcoin’s price would be at a trillion dollar market cap, we would just divide a trillion by 19 million (the current number of bitcoins) and get $52,631. We can do the same with the price of Bitcoin. If we want to know the market cap of Bitcoin would have to be for it to hit $100,000 each, we can multiply the price by the number of coins and we would get $1.9 trillion. Now that you know how to easily “predict” the price of crypto, check out what the prices of top crypto would be if they had a trillion dollar market cap.
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