Cryptocurrency “market caps” and notional value
Excellent explainer from Molly White, which explains the risk around quoting “market caps” for memecoins:
The “market cap” measurement has become ubiquitous within and outside of crypto, and it is almost always taken at face value. Thoughtful readers might see such headlines and ask questions like “how did a ‘$2 trillion market’ tumble without impacting traditional finance?”, but I suspect most accept the number.
When crypto projects are hacked, there are headlines about hackers stealing “$166 million worth” of tokens, when in reality the hackers only could cash out 2% of that amount (around $3 million) because their attempts to sell illiquid tokens caused the price to crash.
Tags: molly-white memecoins bitcoin rug-pulls scams liquidity market-caps cryptocurrency