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Author : Crypto Income Staff 21 November 2017
This applies more to NEW coins that have recently come out of ICO over coins that have been on the market for a long while (with the price stabilized). For new coins that have tremendous returns out of an ICO (say 10x-100x), the investors who bought at presale prices are in wild profits. For example, with ICON (ICX), the ICO price was about 11 cents. Investors who bought at ICO can sell for 1 dollar and still make 9x returns. If the price is $4 dollars (current price), they could sell all the way down from $4 to .20c and still make ROI multiples of at least 2x. What does this mean? The more investors there are who are holding a huge supply of coins they bought for cheap during an ICO, the harder it may be for the coin price to pump up without a serious correction happening. The number of investors who bought in at ICO price often need to be ‘washed out’ of the coin before the coin price can really pump.
These ‘washouts’ happen when there is a correction and the people who bought the coin in ICO/Presale ‘sell out’ of their coin and take profits. New buyers come in and buy at the higher price and this becomes the new base support. The more people that buy at the higher post ICO prices, the more fixed that price becomes because people will be less willing to sell below that price at a loss. So it’s not a good idea to buy a coin right out of ICO without first waiting for a big correction that washes out the early investors. MARKET CAP: THE MOST IMPORTANT FACTOR FOR INVESTING. Market Cap or market capitalization is the most important number related to a cryptocurrency. You should study Market Cap carefully because it is the easiest factor related to an altcoin to measure and understand. The Market Cap is the value of all the units of an altcoin on the market right now. It can be easily determined by simply multiplying the Circulating Supply by the Coin Price.
If the Circulating Supply of IckCoin is one billion, and the Coin Price of IckCoin is $1 then the Market Capitalization of IckCoin is $1 billion. The Market Cap is vital because it determines how much potential ROI (Return on Investment) you can achieve. A high market capitalization means that there is less room for the coin price to increase. A low Market Cap indicates that an altcoin might be capable or more growth. Knowing the amount of potential price growth is good because it can determine the Return on Investment (ROI) from a cryptocurrency. The ROI is always a good thing to know because it is the amount of money you might make from the investment. ICO’s and Market Cap. The Market Cap can also tell you the potential value of an Initial Coin Offering (ICO) and is one of the strongest metrics investors can use to gauge how profitable an ICO may be over the short and long term.
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