Hi, It's Unicorn

 

The two significant aspects affect the market cap.

 

Price

 

The price of a cryptocurrency is similar to the price of a stock. It is matched by investors' buying and selling prices. However, what factors are affecting buyers and sellers? It can be organized into the following points:

 

1. Development of the cryptocurrency's application

 

For instance, Ether is a cryptocurrency used through the blockchain technology of Ethereum. Ethereum is a platform, is like a computer operating system. You can execute many decentralized applications on Ethereum. The most valuable and potential application is Smart Contract, which can put all the business communication processes, contract signing, and subsequent execution on Ethereum for fully automated execution and cannot be tampered with. The development of smart contracts is highly diverse and can be trusted by investors, which is also reflected in their price growth rate and market cap.

2. Large traders

 

If news comes out that a well-known person in the investment industry buys the cryptocurrency, it may cause the price to go up and increase the market cap; or it is reported that the founder has sold a lot of cryptocurrencies, which may also cause the cost of the cryptocurrency to fall. If large traders hold a particular cryptocurrency, they have the motive to manipulate the cryptocurrency price for profit. They release minor chips, and it may cause high volatility of the cost. If you invest in this kind of cryptocurrency, you have to observe the behavior of prominent traders.

 

3. Marketing method

 

There are rigorous marketing plans for all the popular cryptocurrencies that can enter the top 100 market cap rankings, like interacting with investors in the community and cooperating with exchanges to do promotional activities. It can make more investors know the cryptocurrency initially. Therefore, you also have to observe cryptocurrencies' marketing efforts before investing to estimate the explosive growth potential in the future.

 

 

4. Community influence

 

Investors who invest in the same cryptocurrency will build a community to discuss the cryptocurrency and trading operations frequently because they all have enthusiasm about the cryptocurrency. If the community becomes more extensive, it’s more accessible to attract more people into the community and trade this cryptocurrency. It may cause the price to go up and make the code improve, and even new applications can be developed.

 

The total number of circulation

 

The total number of cryptocurrencies and the amount in circulation are determined by the creator, based on the purpose of its creation and its application in the market. For instance, Bitcoin is supply-limited. New bitcoins are created roughly every ten minutes, and the rate at which they are generated drops by half about every four years until all will be in circulation. The total amount will approach 21 million in 2140. The purpose of supply limited is to avoid inflation and maintain the value of Bitcoin. The purpose of Ripple issuance is for the first decentralized payment network in the world. The feature of Ripple is that the transaction confirmation process can be completed within a few seconds and the handling fee is low. It makes more people trade Ripple. 

 

Should I invest in a cryptocurrency with a small market cap?

 

The top two, Bitcoin and Ethereum, are more than 50% of the total market cap of the cryptocurrency industry because they have developed for a long time and the trust of investors. Most new cryptocurrencies have a low market cap. However, like the stock market, there are companies with large and small market cap. If you can study the company's fundamentals, you can know which company is operating well with good cash flow, and its potential cannot be underestimated.

 

If you want to know some cryptocurrencies with a small market cap, you can read their white paper and understand their developing background, technical foundation, and team capabilities. You may find the next potential cryptocurrency.