For those who want to know how cryptocurrency prices are determined, including specific calculation methods and the importance of data. This article provides a clear explanation of basic knowledge, using XRP and Pi Network as examples.
Basic Determinants of Cryptocurrency Price
Cryptocurrency prices are primarily determined by “market capitalization” and “circulating supply”. Market capitalization is the current market price multiplied by the total supply of coins. Circulating supply, on the other hand, refers to the number of coins available for trading in the general market.
Specific Example: In the case of XRP
Taking XRP as an example, the following calculation is performed:
- Market Capitalization: 122,450,000 dollars
- Circulating Supply: 57.41 million coins
In this case, the price per coin is calculated using the following formula:
Market Capitalization ÷ Circulating Supply = Coin Price
122,450,000 ÷ 57,410,000 ≈ 2.13 dollars
In the case of Pi Network
Unlike other cryptocurrencies, Pi Network is positioned as a “digital currency”. Therefore, specific factors need to be considered when predicting its price.
Pi Network Token Distribution
According to the Pi Network white paper, tokens are distributed as follows:
- Community: 80%
- Core Team: 20%
However, not all community-allocated tokens are included in the circulating supply. For example, some are locked and not available for trading on the market.
Locked Assets and Circulating Supply
In the Pi Network, many assets are locked by smart contracts or other agreements. These are not included in the circulating supply; only tokens available for buying and selling on the market are counted. There are also reports that many mining users have a 3-year lock-up, so the circulating supply is expected to be limited.
Data Required for Future Price Prediction
To predict the initial price of Pi Network, accurate data regarding market capitalization and circulating supply is required. This includes:
- Ratio of Locked Assets to Unlocked Assets
- Estimates of Funds Obtained from Investors and Advertising Revenue
Summary
When predicting cryptocurrency prices, such as for XRP and Pi Network, market capitalization and circulating supply are key. Accurate data collection and analysis are also essential. Especially in the case of Pi Network, it is necessary to proceed with predictions cautiously while understanding its uniqueness.