I am seeing a lot of inflow of new traders to crypto and stocks in general, and it seems a lot of similar questions are coming up. So I thought a glossary of terms could be helpful. I am not a trading expert by any means, but this is what I know:
Stock Price : Value of a coin or stock based solely on the last completed trade. A trade can only happen when a buyer and a seller agree on the value of the coin they are trading. Which determines the price. Stock and Crypto trading is haggling and negotiating at it’s foundation. People determine the price; there is no material aspect of a company or coin that sets the price, only what investors think those various business aspects (having an exchange, offering NFTs, etc) are worth and finding another trader who agrees.
Volume : This describes the actual amount of a coin that changed hands within the trading day (or for crypto, the past 24 hours). Volume can be described in number of coins or in combined cash value of the transactions. Volume is always a representation of both buys and sells since one cannot exist without the other.
Circulating Supply : the number of available coins in the market to the general public. For SHIB, this EXCLUDES any burned coins, and it is unclear if this accounts for Staked coins or not since sources are conflicted if the circulating supply is 549T or 589T. (The 394T supply going around, if it ever was accurate via the staking argument, is No. Longer. Accurate. @Shibburn on Twitter tracks the Ethereum transactions and is a running count of total coins burned, but doesn’t account for coins staked.)
Market Cap : An estimate of total value of a crypto/stock/asset. This estimate is a simple calculation of # of Coins/Stock multiplied by the current price. Reported Market Caps are not actually verified by any “real money” put away in any account or anything, it is simply and only a mathematical equation of value based on two numbers and represents the total amount of money invested into the coin/stock across all investors.
EDIT: From Fidelity: “Why is market capitalization such an important concept? It allows investors to understand the relative size of one company versus another. Market cap measures what a company is worth on the open market, as well as the market’s perception of its future prospects, because it reflects what investors are willing to pay for its stock.”
There is a lot of misinformation regarding market cap and “real price” or “owed” price because of the recent correction of the circulating supply. (The 394T vs 549T/589T nightmare) But price is determined by an agreed upon value, so you can’t use Market Cap to reverse engineer a “would be” price because Market Cap is only an equation to express estimated total value at any given time based on the price and supply at that time. So you can’t use a stagnant Market Cap with a different circulating supply because a different circulating supply fundamentally changes that Market Cap. Hence why the Market Cap jumped so high at the same time the circulating supply got corrected to a higher number. Because Market Cap is only an equation to provide an estimate of value and is not representative of actual, real money anywhere.
Hope this helps. ShibaStrong, fam. ✌️
submitted by /u/t1hypo13
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