How does dilution affect the market capitalization of digital currencies?

1 answers

• Dec 26, 2021 · 3 years ago
  Dilution plays a role in the market capitalization of digital currencies. When a cryptocurrency undergoes dilution, it means that the total supply of coins or tokens increases. This increase in supply can potentially lead to a decrease in the value of each individual coin or token, as it dilutes the overall ownership of existing holders. As a result, the market capitalization of the digital currency may be affected, as the total value of the cryptocurrency is divided among a larger number of units. However, it's important to consider that dilution can also be a strategic move by the cryptocurrency project to attract new investors and fund future development.
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