I hear this all the time, but does anyone really think that the market cap is what you can really get for an asset?
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.
The point is that no one really knows the actual value of any asset until you've sold it. You can only measure value in the past; future values can only be guessed (excluding things like future contracts).
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.
I completely agree about "market movement predictions", but market cap is not a prediction, it's a metric, a statistic, a made up value that can help you compare one asset to another.
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.
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.