It's certainly not bad journalism, this is how all sorts of assets are reported on. Market Cap isn't a perfect metric but it's pretty good and keeps us from saying things like "AMZN is down 50%" when they do a stock split.
In the sense that yesterday if you summed up what all the individual holders saw when they checked their accounts you'd get $200b and today if you did the same you'd get $100b then $100b did vanish.
If 10% of stock holders are able to cash out without changing the price significantly, market cap would be an inaccurate measure, but not that far off.
If, on the other hand, only 0.1% of holders of some token are able to cash out without significantly affecting the price, the value they think they have just isn’t there (to a much larger extent than the case above).
To use an extreme example: if I issue 2^100 tokens, and manage to get a couple of orders in an order book with a mid (and “last trade”) price of 0.1 cent, and this price goes to zero, did 1.268^27 dollars of market value just vanish, or were the holders of this token misinformed?
The inherent inaccuracy of market cap value is inversely proportional to liquidity: the less liquid the asset, the further away from reality market cap value is. And these tiny tokens are some of the least liquid assets in existence.
If I buy 100% of bitcoin, I've got nothing. Nobody will be interested in a token that can't be used for anything any more.
Note that the same would happen if everybody started dumping their wealth in whatever form: shares, real estate, and fiat money, even hard bills. What we call value is just the promise that somebody, at some future moment, will be willing to exchange what we have for something else (food, goods, houses, or of course any other different store of value). If everybody is trying to get rid of something, the value of that something just drops to zero.
> $100B in Market Value
When the market price of an assets drops, it loses market value.
A good analogy is comparing the advertised price of a used car versus what you actually get for it. You might think it's worth $5k, but there's only 1 person who wants to buy it and they're only willing to pay $4k, so it's actually worth $4k, not $5k. It doesn't matter if someone else sold theirs for $5k.
It's a metric, one as "untrue" as an average or median. It's not a contract, and you won't get that if you change the market, which selling and buying does.
I don't think that means we shouldn't use it as a metric to use to get information from for comparisons. And I don't think that it's bad journalism to say that the market cap dropped by $100B when it did, even if that doesn't equate to $100 billion being burned.
This is true regardless of whether we're talking about Bitcoin, stocks, metals, houses, chickens, or seashells.
Most of these stupid market movement predictions are equivalent to astrology and only exist because WSJ and others have nothing interesting to say. The daily market fluctuations are pretty much random, and this has been proven many times over.
It is used like a unitless measuring stick, not a prediction on what you can get if you sold.
And I'll argue that it does it's job fairly well. It's difficult to "game", and can help give you some information about an asset. It doesn't say everything, it can't tell you if it's stable, or if it's being used or not, or if it's a scam. It's just a tool, a metric, something that you use with a bunch of other tools to get an idea of the ecosystem.
I would be happy to "rename" it to a unitless value that doesn't imply a "total worth", but that ship has sailed, and it's not going to be possible, so we have what we have.
I don't think anybody is claiming the number on Coin Market Cap is the actual market value because it is simply a metric derived from aggregating across multiple, very volatile exchanges.
EDIT: ok i saw your comment below, and it seems you are arguing, albeit very aggressively, that daily market fluctuations are random and cannot be attributed to an actual event, such as this one?
https://www.investopedia.com/terms/m/marketvalue.asp
Market value definition:
> obtained by multiplying the number of its outstanding shares by the current share price
The reality of selling has nothing to do with it. It's just a math equation.
Also investopedia isn't exactly a high quality source.
In the stock market, if a company has ten million shares at $100 each we say the company is worth a billion dollars, even though that $100 price is only the most recent transaction. We say that because if price times quantity didn't match what the overall market thinks the whole company is worth, the price would quickly correct until it did.
"Market capitalisation or market cap is the market value of a company's issued share capital – in other words. the number of shares multiplied by the current price of those shares on the stock market."
Net worth is the same concept. Jeff Bezos net worth is calculated based on how much his assets are theoretically worth based on current fair market prices. He doesn't have to sell all his assets to determine his net worth.
People don't like the "lost $100B in market value" part, but it is accurate since market value is calculated on paper.
Market value is exactly what the parent asserted it is, and the source of truth for that is your bank. If you are long 500k shares of AAPL and the quote is $100 - your bank will not consider you to have $50mil liquid assets. They know(and you should to) that starting to unwind a position of that size will decrease the market value a considerable amount.
Maybe an example will help you out here.... Let's walk through that AAPL example. You are sitting on 500k shares.
Step 1: Order 100,000 shares sold at market.
Step 2: Observe your average sale price is more likely to be $90-95 than $100.
Step 3: Order another 100,000 shares sold at market.
Step 4: Observe your average sale price is more likely $90-91 than $90-95.
Steps after this: same result, diminishing prices resultant from your sale(s).
See a trend here? The market value of your assets is decreasing based on the market's perception of value, not on the mechanical formula investopedia fed you. Your unloading of shares is going to decrease the perceived value, which decreases the price you can sell them for.
tldr; investopedia's advice on markets is barely more accurate than urban dictionary's advice on word meaning.
So as crazy as it sounds $100B in market value can be erased by a drop in the market price of an asset. But don't confuse that with $100B actually being lost or investors realizing $100B in losses. But in any event the title of the article is accurate.
Apple traded 21,583,997 shares today. Aggressively selling 500,000 shares (less than $100 million dollars worth) might move the market in this stock by perhaps 1%, certainly not anywhere near 10%.
"Market value" doesn't mean squat if you've no buyer in front.
But, market value means the market price * total assets. So, market value is erased when market prices drop and created when they rise. How you interpret a ride or drop in market value is up to you.
It's just like saying my house was appraised at $300k. That doesn't mean you will get an offer at that price, but it's not accurate to say that the appraisal value isn't $300k unless you find a buyer at that price. The appraisal price and purchase price are separate.
An aggregator changed its reporting methodology. Coinmarketcap is a price aggregator, not a market. All of the markets are unaffected, it just happened that the markets that got removed from the aggregator are the ones that had the highest prices. But they're still there. You can still trade on them the same as before.
Imagine two different sets of digital objects: AlphaCoins and BetaCoins - they're identical in the say way physics professors say "imagine an infinite frictionless plane". Both have a 1000 in circulation.
Both are worth $10 each.
Both have a market cap of $10,000 US Dollars.
But the market for AlphaCoins is "thin" (small changes in supply and demand make for really big price swings).
There's a run on the market and everybody wants to sell off their coins.
After a day's trading:
AlphaCoins price is $3 / coin.
BetaCoins price is $9 / coin.
For goods and services you'd call this the price elasticity of demand (You can change the price of medicine and people will keep paying it b/c without it they'd die - it's inelastic - the same can't be said for a snack bag of cheetos).
To me, this is the article's argument. That while these terms describe the same things across markets there are some big differences not captured in simple "market cap" comparisons.
Maybe a better analogy is two all you can eat restaurants (identical, yadda yadda) but at one you can use your full set of dining implements and at the other you can only use a fragile toothpick to eat your food with - and all anyone can write about is how the quantity of food in both places is the same.
Can an economist or serious financial person please tell me what this term is called?
If you tried to liquidate the same amount (denominated in USD) in NEM and LTC you'd see much more price slippage in LTC than in NEM.
until of course you can take a loan collateralized by the asset. Or get/sell some CDS/future/option based on the asset - that way you can even work with amounts larger than the market cap.
Your point is moot. That ship sailed 100 years ago.