Quote:
Originally Posted by crucifissio
so I just saw BTC dip 300$ in 5 minutes...literally looking at the 5min/candlestick chart...
for convenience sake lets say its a 3% drop in 5 min...with a market cap of $160bil this means +4.5 billion $ got sold in 5min...
I call bullshit on that...
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Your logic is faulty because you don't understand the definition of market cap.
Market cap = total coins ( or shares, etc.) outstanding X price
Change in market cap != transaction value (number of coins traded X price)
To make it simple, let's use an example with rounded off numbers. Assuming the last Bitcoin trade was 1 coin at $10,000 and there were 15 million coins outstanding, the market cap would be $150 billion. Let's say that some calamitous news came out and the very next trade was 1 coin at $1,000 or at 90% below the previous trade. The market cap would then be $15 billion ($1,000 X 15 million). $135 billion of market cap would essentially evaporate. The shrinkage in market cap of $135 billion would not equal the transaction value, which is merely $5,000.
Using another example, if a Bitcoin traded at $10,000 with 15 million coins outstanding and there were subsequently a million Bitcoins traded at the same price of $10,000, the market cap would remain at $150 billion, despite $10 billion of transactions.