Realized capitalization indicators of the major cryptocurrencies

Realized capitalization indicators of the major cryptocurrencies

Studying the realized capitalization indicators of the major cryptocurrencies, we came across an oddity that immediately caught my eye.

The first oddity: XRP at the peak of growth almost catches up with Bitcoin on this indicator, and the second, even weirder, is that the current indicator is significantly higher than Ethereum’s.

Before we go any further, let’s recap what realized capitalization is and how it differs from market capitalization. If we talk about the market capitalization that most readers are used to and on which many services operate (CoinMarcetCap), this is nothing more than multiplying the current value by the total issue. And this information means nothing. The realized capitalization is the sum of the realized price, which is the market value of the asset at the time of the last transfer (or issue).

Indicators of the major cryptocurrencies

For example, if you bought 1 bitcoin for $1,000 and the current market price is $9,000, then the effective price of your bitcoin will remain $1,000 until you move it to exchange for the purpose of selling (trading) or transferring it. Third – as payment for the service provided.

Is there any downside to this method? Of course, there is: say, if you decide to just move your bitcoin to the purchased hardware wallet address, then your realized price will also change, or if you decide to sell not all of the bitcoin, but only half, then because of the details. of the protocol, you will send all the bitcoins and half will return to your wallet, only to the new address in the form of “change”. But this half will also change your realized price because the third party cannot determine if your private key is associated with the new public key (new address). However, such “noises” do not introduce critical distortions. And the realized price is actually the average value of all issued coins.

Given that the 1% of the richest addresses in the Ethereum network control 97.3% of all its issuance, and the Gini coefficient, excluding the addresses of the big exchanges, smart contracts, is 0.997. With such a concentration of an asset, its owner can draw not only a “triangle” or “diamond” on the chart, but also decorate it with a monogram of the first letter of its name, which makes graphic analysis very similar to guessing on coffee grounds.

On the other hand, such a concentration of an asset in one hand makes the indicator of realized value, in fact, the average value of a major player’s portfolio. And the realized capitalization is the realized price multiplied by the issue. Based on this, we can analyze when a major player buys, when he sells and when he distributes.

But let’s get back on topic. To do this, let’s look at the realized capitalization of these three coins separately, compared to their market capitalization.

On the Bitcoin chart, there are typical cyclical phases of growth, distribution, trough (when the market capitalization falls below that realized for a long time), and again accumulation with growth (with a false intersection of the market price realized earlier in the day). March) . In a word, nothing out of the ordinary.

In the air, the image is different from bitcoin, but overall it looks natural. We are now again trying to gain a foothold above realized price, and both indicators are almost equal to each other.

In a nutshell, the market price corresponds to the average value of the portfolio of a great player, and most likely, he has already finished accumulating volume.

But the XRP chart is disturbing. The difference between the realized capitalization and the market capitalization is 7.5X. The realized price is higher than the market price, even though the spot price has been depressed since the beginning of 2018!

The first thought that comes to mind is what is the average value (realized price) of XRP? Naturally, it should also be 7.5 times higher than the spot. This is easy to calculate by dividing the capitalization made by the issue. Easy for bitcoin, ether, but not Ripple.

Let’s go to CoinMarcetCap, check out the topi – 44,257,803,618 XRP.

We divide 42.3 billion by 44,257,803,618 and we get $0.956 for 1 XRP coin. Impressive, but it doesn’t add up. The current price is 0.176 less than the value received, almost 5.5 times, but not 7.5.

We look further and head to the Ripple site.

Here we see, adjusted for the reporting date (June 21), that the CoinMarcetCap data (July 5) generally does not contradict the Ripple data itself.

But the data on the capitalization of $45.7 billion is very different from the data from CoinMarcetCap: $7.79 billion.

The confusion is growing.

What does Ripple mean by “DISTRIBUTED”?

Let’s look again at the company’s financial statements. In the fourth quarter of 2019 and the first quarter of 2020, the company did not sell XRP on the open markets but met the interest of institutional investors through OTC.

Although here we see that the company has greatly reduced sales, reducing them to almost zero

($1.75 million in the fourth quarter). In the same reports, we see some partnership programs with various companies (Azimo, Anchorage…) that help Ripple develop the direction of ODL payments, and under what conditions the company fills them with liquidity remains an unclear moment.

Since the public reports are written for the “prosecutor”, we will take as a basis that the company distributed 44.5 billion XRP, for which it earned $45.74 billion. In a nutshell, the average selling price of 1 XRP is $1.03, which is already closed.

Let’s see what the COINMETRICS service tells us about the amount of XRP freely circulating on the network.

You see, 30.16 billion XRP is somewhat different from the 44 billion declared by Ripple and collected by CoinMarcetCap. Apparently, this almost 15 billion XRP does not refer not only to the open market, but also to the OTC market, and provides liquidity for other projects.

If you look at the daily and monthly volumes traded on all open sites, it is easy to see that they are negligible.

Granted, the traded volume of 14.8 billion XRP per month indicates the extremely low liquidity of the open market. Those who actively trade will compare their balance to the volume for the month and understand what it is all about.

Since COINMETRICS shared June 28 data with us, let’s try to find out the most recent data (July 5) in the Messari service

Top coins sorted not by market cap but by realized cap look interesting, don’t you think?

So, we have a realized XRP cap of $42,261,071,042 and a free trade issuance of 31,212,590,555 coins. Dividing the capitalization by the issue, a realized price of $1.353975 is obtained. For clarity, let’s plot this level on the price chart.

Ask yourself how many speculators you know gobble up the entire spot up to $3.2 and then get comfortable below $0.18 without selling anything. There are definitely no such speculators, but this is more than similar to a big investor.

And, analyzing this, it becomes clear why and in whose interest Ripple in the first quarter of 2019 and, even more actively, in the second (when the crypto market was growing) suppressed it with its sales.

We cannot answer the question of how long this will continue. But the fact that the realized cap reacted poorly to the asset price crash in March, and Ripple’s lack of timely suppression for six months, hints at the imminent achievement of the stated goal.