The Cardano network has been quite impressive, even now during the seeming bear season. Several altcoins have nosedived due to the dump, and even more, are almost towards zero. While all these are in place, Cardano seems to hold on it its position remarkably. Cardano’s price and other altcoins are having difficulties breaking off the resistance and progressing to the next stage mainly because of Bitcoin’s dominance. Hence, whatever happens to Bitcoin affects several altcoins. Nonetheless, while Cardano is also an altcoin, Cardano’s price remains unmoved, as noticed in the usual trends. The reasons behind this have a thing to do with Cardano’s market capitalization and its max supply cap.
The influence of the supply cap on the price of Cardano is worthy of being studied, as the supply cap has an impact on the price of any coin. Bitcoin is an example of crypto whose growth can be explained by its max supply cap. Like the law of demand and supply, which predicts that the more the supply, the lesser the supply, the more the demand. So, it’s pertinent that you understand how demand and supply affect the price of a coin.
Influence of supply capitalization on Cardano
Here are some of the Influences of the max supply capitalization on the price of Cardano
● It gives a range of values:
There have been several assumptions and illustrations that the max supply and total supply of a coin do not have any effect on the price. However, that’s not entirely true! The total supply gives a definitive report on the number of Cardano that are available. In contrast, the circulating supply allows you to calculate the number of Cardano in the hands of investors, individuals, and private organizations. So, while the total supply of ADA as of June 2021 was 45 billion, its circulating supply was 31.9 billion. This means the price of Cardano will most likely fall when more Cardano is injected from the total supply into the circulating supply. Contrary to this, if more Cardano is burnt, then the price of Cardano is lost, likely going to pump as the lower the supply, the higher the demand, and the higher the demand, the higher the price. Hence, Cardano’s price has a lot to do with its supply as it assists you in understanding the flow and the rate at which the price fluctuates.
● It’s an indicator:
Some of the methods in understanding if a coin will be a great investment is by taking a firm, looking at its max and circulating supply. Again, the supply influences the price of a crypto coin. Bitcoin, for example, has a considerably small total and circulating supply compared to Ethereum and Cardano, and that explains why the price of Bitcoin is high. However, other factors affect the price of a coin, even than the supply, but supply remains one of these factors. That the influence of supply is In-negligible doesn’t mean it’s not a determining factor. So, as an investor, before investing in any crypto, endeavor you make your research as wide as it can get and take note of the supply. As explained above, the circulating supply and total supply are not the same, although they have the same function.
● It explains the fundamentals of the project:
One of the reasons why Cardano is rated as a top cryptocurrency is because of its strong fundamentals. Most of these news cryptocurrencies are mainly for awareness and won’t leave the level they were after ICO. The prices will likely drop to either its ICO price or even lower because they lack basic fundamentals of how hardy a coin should be. On the other hand, Cardano is a third-generation cryptocurrency, meaning more than its market supply and circulating supply. It has a way of connecting its investors with reasons why they should invest. In this case, the supply acts as a secondary reason why Cardano’s price increase and decrease. Cardano being a technologically advanced crypto, runs its transaction on the PoS consensus making it one of the fastest cryptocurrencies. So, these characteristics bring into consideration why you should invest in Cardano with the help of the project.
The total supply and circulating supply affect the price of Cryptocurrency, although the impact varies from coin to coin and the coin’s fundamentals. So, before conclusions can be arrived at, it’s important that the coin is properly studied, and indications should show the correlation between its total supply, circulating supply, and price.