Crypto

The Big What If

What if my Dogecoin goes to $10? What if Cardano goes to $1,000? What if, what if, what if.

It's easy to get caught up in crypto hysteria and completely disregard reality. For those that aren't exactly mathematically inclined, it can be especially easy to put your head in the clouds and dream of the private island you are going to buy. It's extremely easy, for whatever reason, to believe alt-coin XYZ is going to fly off to a $100 trillion valuation.

Right now there are people who believe Dogecoin—the epitome of crypto excess, for the moment—will go to $100, $1,000, $10,000. "To the moon!" they howl, along with Elon Musk on Saturday Night Live. But if you unwrap that idea, even just a little bit, you'd see it is utterly impossible.

Dogecoin has a total supply of 130 billion coins, currently, and that will rise by about 4% per year. It doesn't even take a calculator to see that a $100 coin price would equal $13 Trillion. That's trillion, with a T, not billion.

Bring up Google and type in, "What is the entire economy of the US worth?" and you'll get an answer of $25.3 Trillion (estimate for 2024).

Ask yourself, does it make one iota of sense that Dogecoin would be worth half of the United States? If you watch enough YouTube you'll find someone that is trying to convince you that, in fact, it makes perfect sense. I'm here to tell you today, in total sincerity, that it does not make sense, and it will never happen.

The point is, it is important to temper enthusiasm with at least a small nod towards reality.

Crypto Coins in Circulation x Dream Price = Market Cap

Cardano to $1,000? That's $32 Trillion. Want to know how much money exists in the world right now? About $37 Trillion. I think it's fair to say Cardano isn't likely to ever be worth as much as all the cash in the world. Probably not worth betting the house on that.

An important point to remember with crypto is that unless you were involved in the coin during its development and launch, you are unlikely to realize the 100x, 200x, 1000x returns that a blockbuster world-changing coin could potentially make. That doesn't mean there aren't high returns to be made, it just means you should recognize potential value based on number of coins outstanding and a realistic potential market cap.

Bitcoin, the world's largest cryptocurrency, has a market cap today of just a hair over $1 Trillion. $1,030,528,838,977

Use that as a baseline and do some basic calculations. A popular, useful website, is coinmarketcap, where you can see the number of coins in circulation, and the max number of coins that will be mined (if there is a max). One quick look there and you'll see that Ripple has a max supply of 100 Billion. If someone told you that Ripple (currently worth $1.42) was going to rise to $100 would you believe them? Not if you did the quick math. $10 Trillion? Not going to happen. But what about the $1 Trillion baseline? If you believe Ripple's utility is going to make it a Bitcoin contender, what would the price be at a $1 Trillion market cap? $10 based on that max supply number, or about $28 at its current 35 billion in circulation number. Either way, this calculation at least helps you put things in perspective.

Do this with every crypto purchase you consider. Do this with every crypto Youtuber's clickbait thumbnail header. Do this, and you'll be ahead of the game before you even get in the game.

Crypto value

Keep Up With the Wanderer Crew No Matter Where We Are

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I've been trading and traveling my entire adult life. I'm currently trading from my boat in the Caribbean. Over the years this has gotten easier and easier to do. Drop the anchor, tether your phone to your laptop, browse some charts, and trade. At Wanderer we first began investing in Bitcoin in 2017 when it was worth $2,500. Fortunately, we recognized its potential, unfortunately, we didn't realize it even earlier. Today it is worth about $50,000, and we believe it is here to stay. Bitcoin will have its ups and downs along the way, but years from now we expect it will be much higher, and we'll still be bopping around in the islands.

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