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How is the Market Cap affected by the inflation rate of cryptocurrencies?

The marketcap, a key parameter in the crypto world, is affected by inflation. How to calculate the inflation rate of cryptocurrencies.

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Is the Market Cap affected by inflation? Yes, and the relationship between these two parameters is to be kept in mind when thinking about the future value of a token.

Nairatalktoday’s mission is to allow everyone to enter the world of cryptocurrencies in the simplest and clearest way possible, even for those with little or no experience.

Through us, you can know the value of cryptocurrencies in real time. In this case we offer you a formula on how to calculate the inflation rate of a cryptocurrency.

This is how the inflation rate of a cryptocurrency is calculated

To answer the question of how the inflation rate of a cryptocurrency is calculated, just take a look at the following formula:

Inflation factor = 
(tokens placed on the market in the next 5 years)/(current total supply) * 100%

 

How is the Market Cap affected by the inflation rate of cryptocurrencies?

 

Of course, the inflation rate of a cryptocurrency also affects the Market cap.

Inflation has an important bearing on the potential future value of tokens; in fact, a cryptocurrency with low inflation rates will have a more constant value or one that will tend to increase, while those with high inflation rates will have a value that should, over time, decrease. This is an important fact to take into account when you want to ‘identify the best cryptocurrency in which to start investing.

The advantage is that you can know in advance what the inflation rate of a cryptocurrency will be because it is written in the token’s own protocol.

Inflation plays an important role in asset valuation as it partly dictates the future value of the tokens. Tokens with low inflation rates retain or increase their value over time while those with high inflation rates should see their value decrease over time.

Then it is possible to estimate the inflation and future capitalization of the cryptocurrency under consideration.

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