Is Bitcoin’s Market Cap Overly Inflated? Let’s Have a Look at BTC’s Daily Inflation Rate

At press time, the total market cap of the crypto sector is touted to be somewhere around the $120 Billion marks. However, fresh new data released by Diar seems to indicate that billions of dollars worth of this market cap comes from “inflated figures” that do not represent the true financial worth of this burgeoning sector.

In addition to all this, it is also worth noting that $15 billion worth of new digital tokens have entered the crypto supply chain during the course of the past 13 months — thereby increasing the valuation of this market even though crypto prices at large have remained relatively low.

More On The Matter

Looking at the aforementioned matter objectively, we can see that on an average 12.5 BTC tokens are added to the premier currency’s supply pool every 10 minutes. So, if we were to assume that the base price of these coins is around $3,000, a total of $37,500 worth of these assets are added to the market every 600 seconds. This number when extrapolated comes to around $5.4 million (per 24 hours).


Add to this the fact that Bitcoin SV and Bitcoin Cash also contribute around 1,800 coins per day to the above-stated currency pool (as a result of which we get a combined value of around $360,000).

By making use of all of these figures, we can see that all three BTC variants “add a minimum of $5.7 million to the currency’s market capitalization every day” — that’s $1 billion every 175 days even if the markets do not witness any trading activities.

Better Metric Standards Need To Be Employed

Even though market cap information can easily be procured through a host of different websites today, it hardly serves as the best metric standard for ranking crypto projects.

For example, all of the altcoin figures that we have presented above showcase prices of digital assets that are currently in the midst of a bear market. These same numbers can get much bigger as and when a bull run kicks in. In this regard, a new study released by Diar, shows that even Ethereum itself has added $1.5 billion via inflation to the market. Not only that, the altcoin market as a whole averaged around 35% in overall increases owing to new digital offerings entering the market.

On the matter, the folks over at Diar further noted:

“What does stand out even more as a sore thumb in the midst of a bubble burst was the $5Bn in value that cryptocurrency traders have appreciated in new tokens that did not exist at the start of the bear market. When all is said and done, new supply that came into the blockchains during 2018 accounted for almost the whole market valuation that stood at the start of 2017.”

Final Take

In rounding out this article, it is worth understanding that market capitalization figures are quite simplistic and do not take into account things like ‘buy orders’ (which more often than not can provide economists with a very different picture of the market’s current state). Due to these small but important issues, we need to take a more detailed approach when calculating crypto-based inflation numbers— primarily because the issue is quite a complex and requires us to take into account a myriad of different factors.

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