Know the price of a token before launch

Predicting the price of a token before its launch involves making informed estimates using key data points like its circulating supply and projected market capitalization. The following is an in-depth breakdown of this process, offering a clearer and more comprehensive explanation:

1) Understand the Circulating Supply

Circulating supply refers to the number of tokens that will be available and actively traded in the market at launch or shortly thereafter. It excludes tokens that are locked, reserved, or scheduled for future release (such as those allocated for staking, the team, or long-term distribution). This number is crucial, as it directly affects the token’s price by determining the supply accessible to the market.

How to Find It:

You can typically find information about the circulating supply in the project’s whitepaper, official website, or announcements related to tokenomics. If it's not clearly stated, you may need to estimate it using the total supply and details from the token release schedule, such as vesting periods or planned token burns.

Example:

Imagine a project launching with a circulating supply of 10 billion tokens.

2) Estimate a Potential Market Cap

Market capitalization (or market cap) represents the total value of all circulating tokens and is calculated using the formula:

• Market Cap = Circulating Supply × Price per Token

• To speculate on a token's potential price, you first need to estimate a realistic market cap at launch. This involves research and context, considering several key factors:

• Project Type and Sector:

Identify whether the project is a DeFi protocol, layer-1 blockchain, gaming token, etc. Compare it to similar projects. For example, established platforms like Ethereum or Solana have market caps in the billions, while new tokens typically launch between $10 million and $1 billion, depending on utility and hype.

• Team and Backing:

A credible team with strong investor support or partnerships can justify a higher market cap.

• Market Sentiment:

Bull markets often lead to inflated valuations due to investor excitement, while bear markets tend to bring more conservative market caps.

• Token Utility:

Tokens with real-world use cases—such as governance, staking, or in-platform payments—are often valued higher than purely speculative assets.

• How to Estimate:

Research recently launched projects in the same category to find comparable market caps. If similar tokens debuted with valuations ranging from $100 million to $1 billion, you can choose a figure within that range—either conservative or optimistic—based on the project's fundamentals and market buzz.

Example:

Based on its sector and anticipated hype, you might estimate the project could launch with a market cap of $500 million.

3) Calculate the Speculated Price per Token

With both the circulating supply and your estimated market cap in hand, you can determine the potential token price using this formula:

Price per Token = Market Cap ÷ Circulating Supply

• Example Calculation:

Circulating Supply: 10 billion tokens

Estimated Market Cap: $500 million

Price per Token = $500,000,000 ÷ 10,000,000,000 = $0.05

Based on this estimate, each token could potentially launch at a price of $0.05.

This is how you speculate a token price before launch.