Cryptocurrency Intrinsic Value Formula

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Hey guys

So in today's article I will outline a simple intrinsic value formula to assess potential growth for cryptocurrencies. Please keep in mind nothing is foolproof and this formula should only be used to gauge interest in the prospect of a crypto. A commitment to invest should include the intrinsic valuation with additional research into factors that effect a coin such as: tech, market share, notoriety, use, and the overall crypto market.

To start with I would like to familiarize the reader with three different metrics.

Market Capitalization: this is basically the value of the entire cryptocurrency. The amount of coins multiplied by it's price
Circulating Supply: This is the amount of coins being used in circulation
24 hour volume: this is the amount of coins being traded everyday

So we know the biggest factor that drives a cryptocurrency up in price is the utilization of said crypto. Therefore I like to keep tabs on the 24 hour volume each day to see how many people are using certain cryptocurrencies. From that, I compare the volume to other coins with similar or equal circulating supply. To use this metric you must try to find a consistent volume on a daily basis or you may confuse "pump and dump" coins with actual potential. So let's look at an example of this.

Look at both Ethereum and Ethereum Classic. They both have similar supply in circulation (around 95 million coins ). Ethereum is roughly 21 times the size in market cap as "E Classic". Yet the daily volume of E Classic is only ~3.3 times less to that of Ethereum. So lets take Ethers cap ~27.5 billion and divide it by 3.3 which gives us ~8.25 billion. What this conveys to the investor is that E classic is now trading at a volume of 8 times it's market cap today. So to be thorough we need to account for the difference on a daily basis but once you've done daily calculations you will begin to see the potential of some of these coins. Again I wouldn't use this to figure out what I will invest in, I simply use it to gauge my interest in a possible investment. Additionally the best cryptocurrencies to compare are the biggest market caps Bitcoin, Ethereum, Litecoin...etc.

Thanks for reading I hope this information was helpful.