Cryptocurrency Price = A Function of Demand & Supply
The popular market price function relating to demand and supply, also holds true for the market for cryptocurrencies. Rising demand, adequately backed by increasing supply, has resulted in this market ballooning from a $10 billion market in 2016 to a whopping $225 billion market presently. During this time, the demand-supply variables have adequately played their part in determining the market price of individual crypto assets.
Now, the price of any currency fluctuates in conjunction with changes in demand and supply conditions. The demand side for all cryptocurrencies is market-driven, which exposes it to fluctuations. On the supply side, the picture varies from cryptocurrency to cryptocurrency.
Circulating Supply Differs From Total Supply
Not all cryptocurrencies have their total supply circulating (that is, available to trade) in the market. Minable cryptos such as Bitcoin (BTC) and Bitcoin Cash (BCH), have a good 18.6% and 17.7% of their total supply remaining un-mined, respectively. Certain others such as Ripple (XRP) have a decent amount remaining locked in with the founders. So, changes in the supply of these cryptocurrencies by factors that are not market-driven, are bound to impact price. This price impact lies beyond the control and / or predictive ability of an investor.
On the other hand, cryptos which have their 100% supply in the market, have no external factors beyond the market affecting price. Hence, the prices of these cryptos are completely market-driven. Presently, of the major cryptocurrencies, there are just a few out there that fulfil this criteria.
These 7 Cryptocurrencies Are Completely Market-Driven
We identified 7 cryptocurrencies whose circulating supplies are 100% of their pre-determined total supply. These are: Ethereum (ETH), IOTA (MIOTA), Monero (XMR), DASH (DASH), Ethereum Classic (ETC), NEM (XEM), and OmiseGO (OMG). With the supply side remaining fixed at 100%, and demand being entirely driven by the markets, the prices for these cryptocurrencies are completely market-driven. The circulating supply being 100% of total supply limits the fluctuation factor of the cryptocurrency to an extent.
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