A warning not to use 2021 ATH prices for Future Price Expectations – Looking at how changes in circulating supply since 2021 could impact future Price Performance.
3 min read
Introduction:
With the majority of Crypto investors feeling more bullish on the potential long term price performance of crypto. It’s a great time to review MarketCap (price x circulating supply) and how changes in circulating supply could impact future price performance.
Although marketcap isn’t always a good indicator due to how it can be manipulated – it’s a great tool to use for the top crypto assets, we’ll be looking at today.
Let’s face it alts are bleeding and lots of people are hoping their bags will reach prior ATH levels in the coming bull runs. With changes in circulating supply since 2021, we’ll be looking at how the increase in supply would lead to lower prices relative to the old ATH Market Cap.
Reviewing Crypto Assets: Part 1 – Polkadot:
Polkadot is a highly inflationary token – although advocates for this token will say you can beat the inflation by staking, every year lots of new polkadot come into existence.
On Nov. 4th 2021 Polkadot reached an ATH of $55, it’s ATH MarketCap was ~$53.6B and had a circulating supply of ~988M
Roughly two years later the Circulating Supply has increased to ~1.226B
The new ATH price adjusted for the increase in circulating supply would change from $55 to (53.6B/1.226B) ~$43.71.
Part 2 – Bitcoin:
Now that you’ve got the idea, we’re going to skip graphics to keep each section short and sweet.
On Nov. 10th 2021 Bitcoin reached an ATH of ~$69K, it’s ATH MarketCap was ~$1.3T and had a circulating supply of ~18.87M
Roughly two years later the Circulating Supply has increased to ~19.5M
The new ATH price adjusted for the increase in circulating supply would change from $69K to (1.3T/19.5M) ~$66.7K.
Part 3 – Ethereum:
On Nov. 16th 2021 Ethereum reached an ATH of ~$4.9K, it’s ATH MarketCap was ~$580B and had a circulating supply of ~118M
Roughly two years later the Circulating Supply has increased to ~120M
The new ATH price adjusted for the increase in circulating supply would change from $4.9K to (580B/120M) ~$4.8K.
Part 4 – Algorand:
No post on this topic would be complete without Algorand which inflated 533% in 2021.
On Sep. 13th 2021 Algorand reached a bull market high of ~$2.30, it’s ATH MarketCap was ~$11.9B and had a circulating supply of ~5.23B
Roughly two years later the Circulating Supply has increased to ~7.83B
The new ATH price adjusted for the increase in circulating supply would change from $2.30 to (11.9B/7.83B) ~$1.52.
Final Thoughts:
These are just some of the most famous inflationary Crypto Assets from 2021 and BTC/ETH however this logic can be applied by yourself to every other crypto asset. When looking at Alts and future price potential going forward always make sure you look at how circulating supply has changed since the prior ATH.
This will allow you to get a more realistic idea of how changes in circulating supply could impact future price potential.
Important final note: Many Crypto Assets never hit a new ATH from one bull market to the next, on top of that nearly every Alt will long term bleed out against BTC/ETH. These adjusted prices are not expectations for future performance, but simply meant to help readers understand how long term changes in supply can impact price.
submitted by /u/GabeSter
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