There is no way to know if a coin is overvalue or undervalue before it hits the exchanges. All these data means nothing because in 2013, coins can go as low as 0.001 usd per coin during pre-ICO. Now, everyone is hyped up and value their coin at 0.01 to 1 usd at pre-ICO. Both are over valued in my opinion, because value is derived from its popularity, not from its usefulness. If I say a pebble on the beach is worth 10 usd, and this is popularly accepted, this is its value, but it is still a plain useless pebble found freely on a beach.
You are viewing a single comment's thread from:
Hi @fourflames,
In the long term, prices as well as trends will certainly change. Market Cap rose from $40 billion in May of 2017 to double that in June of 2017 ($80b) and we are now headed to twice that amount by Q4 2017 at $160b (which we have already reached back in late August 2017. We are at a new pinnacle of crypto trading - and with that came higher prices, new trends, higher support/resistance levels and so fourth.
During this phenomenal ~$100 billion growth in crypto-mania during the last 5 months we've gone through several corrections and we have recently seen a big hit to BTC since the latest Chinese rumors on banning exchanges. However major the corrections, we are now at a healthy $135 billion market cap for all coins traded.
Volume is high and crypto is finally breaking its silence. September produced the highest levels of ICOs in ICO history. With over 1000+ coins out on the market, investors are going to make sure they minimize their risk and use necessary criteria to protect their investment. Smart investors follow charts and trends and take in as many factors as possible before jumping into a trade. One of the most important criteria to consider is value and its value within its industry. With a surge in new and experienced investors in the past 5 months, can we determine a pattern in price vs circulation?
It's safe to assume that a majority of investors will pay, by whatever calculations necessary, a lower or reasonable price for a coin. If a coin hits a new high and has debatable valuation, investors will sell and cash out. If we assume that a majority of investors follow this price vs circulation rule by comparing value to other coins (and other industries), then a pattern emerges.
The focus of my project was to introduce a tool to determine if your initial investment was overvalued or not, depending on min prices of other coins. Breaking down the first 150 coins on coinmarketcap.com into tiers we can clearly see a pattern for min prices and what buyers are willing to pay for a coin. Rarely, a lower tiered (coins with higher circulation) will have a min price that is higher than an upper tierd coin (coins with lower circulation). Still, the pattern holds strong 93% - 100% of the time.
It would be difficult if not impossible to use this law and apply it to our pre-market boom in the past year or two. It would be therefore also difficult to determine how useful this tool is in the long run. However, as mentioned in my article, we can certainly use this information to determine value in our current, short term market. If we assume the majority of investors are, then the pattern will follow and you would be wise to ride the wave. Always keep in mind, as also mentioned in my article, that this tool is meant to help guide you in your investment decision making and not be a one all answer. Always take into consideration new trends, new tech, chart analysis, and so fourth.
I think you're conjuring meaning to data where no meaning exists. I would be right to say that 99% of the coins are worthless because investors are attaching value to them based on current hype. Nothing has changed from 2009 to now. This is an artificial market that derives its value based on visions and not track record. By next year, 99% of the coins will fade into oblivion.