Crypto assets are digital assets that utilize cryptographic technology to secure transactions that take place in them. One of the most famous examples of crypto is Bitcoin.
Meanwhile, the crypto market is where crypto assets are traded. Like the stock market, the crypto market allows people to buy and sell crypto assets using a variety of currencies, including fiat currencies, such as US dollars or euros.
In discussions about the world of crypto asset business, one common term often heard is market share. As for the Indonesian language, market share means “market share”.
The market share in the crypto market refers to the percentage of market share owned by a particular crypto asset in this industry. Market share in the crypto market is important because it will affect the trust and liquidity of these assets.
So, to better understand what market share is, its function and purpose, its types, and how important market share is in the crypto world, consider the following review.
What is Market Share?
Market share is the percentage of the total market controlled by a particular company or product in an industry. In general, market share is an indicator to measure a company’s or product’s competitive position in the market.
Market share is measured by comparing sales, income, and the number of units a company or product sells to the total available market.
Related to that, this percentage will show the level of market dominance of a product company compared to its competitors.
Meanwhile, in the crypto context, market share refers to the percentage of market share dominance owned by a particular crypto asset in the crypto industry as a whole.
Please note that crypto market share can be measured according to market value (market capitalization), trading volume, and the number of users using these crypto assets.
What is the Function and Purpose of Market Share?
After knowing the definition of market share, now is the time to find out the functions and objectives of market share. Understanding the function and purpose of market share is an important step for analyzing and managing a business or product.
Later, by understanding the functions and objectives of market share, companies can take more appropriate steps to manage the business, develop growth strategies and maintain a strong position in the market.
The following are some of the functions and objectives of market share for investors and company owners, including:
1. Knowing the Power of Brands
The first function and objective of market share is to determine the strength of a brand in the eyes of consumers who have yet to use a company’s products or services.
This can also be used for evaluating and assessing the effectiveness of marketing strategies that have been implemented so far in influencing consumer decisions to buy products or services.
Not only that, the function and purpose of market share or market share is to see the size of consumer loyalty to buy goods or services from the company.
2. Estimating the Company’s Prospects
Second, market share also functions and aims to estimate the company’s prospects in the long term. In this case, market share determines the amount of funds disbursed by stakeholders as an investment in a company.
It should be understood the more investors who invest in a company, the greater the opportunity to develop the scale of the company.
The company’s scale is related to the increased number of recruited employees, the amount of assets, and the public’s understanding of the types of goods and services being marketed.
3. Determining Company Competitiveness
Another function and purpose of market share is determining the company’s competitiveness. Usually, investors will review this competitiveness before deciding to invest in a company.
Types of Market Shares?
Do you understand now what are the functions and objectives of market share? Now, it’s time to find out the market share types. This knowledge is important because it helps analyze the company’s position in a more specific market.
Not only that, understanding what types of market share are will also assist the company in planning appropriate strategies to strengthen its market share.
The following are the types of market share that you need to know, including:
1. Common Market Share
The first type is market share in general, namely common market share. In this type, all businesses in an industry will compete for market share.
In this case, if you want to win the competition in the common market share, the company needs to set its sales strategy to dominate among other companies.
2. Preferred Market Share
The second type is preferred market share. A company obtains this type of market share due to a market acquisition merger.
3. Mutual Fund Shares
The third type of market share is the mutual fund market share. This type of market share is based on share ownership by investors.
4. Relative Market Share
Last on this list is relative market share. This type of measurement compares a company’s market share with the market share of the largest competitor in an industry.
Why is Market Share Important in the Crypto World?
Please note that market share significantly impacts the position and influence of a crypto asset in the crypto industry. This is because crypto assets with a high market share dominate the crypto industry and are considered more trusted.
This dominance reflects the crypto asset’s position as a market leader and can give confidence to users and investors. In addition, the high market share reflects that cryptocurrency also has wide use.
On the other hand, market share can also reflect the popularity and adoption of a crypto asset. The high market share shows widespread popularity and adoption and indicates that the crypto community has accepted cryptocurrency.
If a crypto asset has a high market share, it is popular among users and investors. The large market share means more people buy, sell, or hold these crypto assets.
Furthermore, market share can also have significant implications for the price and direction of the crypto market, for example, related to the influence on prices. In this case, a high market share in the crypto market can affect the price of crypto assets.
Please note that crypto assets with a high market share usually have more stable price movements due to greater liquidity and wider market participation.
Factors Influencing Crypto Market Share
After knowing why market share is important in the crypto world, it is also important to understand the factors influencing it. It is also important to analyze and understand the crypto market dynamics.
By knowing the factors that play a role in influencing market share, crypto companies/developers can identify current opportunities and challenges. The following are several factors that influence the crypto market share, including:
1. Technology and Features
The quality of the technology and features a crypto asset offers can affect market share. Related to this, crypto assets with superior technology will usually attract the interest of users and investors.
2. Trust and Security
The level of trust and security a crypto asset provides is very important in influencing market share. In this case, crypto assets with a good reputation will be more respected and adopted by users.
3. Adoption and Real Use
The level of adoption and real use of a crypto asset can impact market share. Extensive real use by individuals, businesses, or financial institutions can provide confidence and strengthen the position of crypto assets in the market.
4. Availability in Exchange
The availability of a crypto asset on various exchanges and trading platforms also affects market share. Wide availability also increases liquidity and allows for greater participation in trading.
5. Community and Developer Support
Strong crypto community and development team support can also benefit from gaining market share. Crypto assets with an active community will gain greater popularity and adoption.
How to Calculate Market Share
Please note how to calculate market share can be done with the following formula, namely:
Market Share = Sales : Total Sales x 100%
On the other hand, here is the formula for calculating sales, namely:
Sales = Units sold x Selling price per unit
Market share example
For example, PT. PUNCAK KOMPE is a manufacturing company that produces sandwiches with chocolate and durian flavors and donuts with cheese topping.
As for September 2022, PT. PUNCAK KOMPE recorded the following sales:
- Chocolate flavored sandwiches: 800 boxes sold with a selling price of IDR 50,000
- Durian-flavored sandwiches: 900 boxes sold with a selling price of IDR 50,000
- Cheese donuts: 500 boxes sold with a selling price of IDR 40,000
The total sales of all companies in the same industry in Indonesia are known to reach IDR 5,000,000,000. So, what does PT PUNCAK KOMPE own the total market share?
Referring to the data from the case above, it can be seen that the total sales of PT PUNCAK KOMPE for September 2022 are as follows:
= (800 x IDR 50,000) + (900 x IDR 50,000) + (500 x IDR 40,000)
= IDR 105,000,000
Using the previous formula, the market share owned by PT PUNCAK KOMPE throughout September 2022 is:
= IDR 105,000,000 / IDR 1,000,000,000 x 100%
= 0.105%
Tips to Increase Market Share
After knowing the formula and how to calculate market share, now is the time to find out what are the tips for increasing market share. This is important in increasing a crypto asset’s visibility, adoption, and success.
Here are some tips on increasing market share that you need to know:
1. Updating Strategy
When constrained internally or externally, set a strategy and keep updating it as much as possible. A company will be strong when it can strengthen its position and develop a strategy to face challenges.
2. Product Development
Product development is also important to find a wider market segmentation. It’s best if a product goes through a series of research to continue to be developed, both in terms of quality and branding.
3. Business Expansion
Business expansion can occur through brand mergers or acquisitions of two/several companies. In the end, this step can increase a company’s market share.
Conclusion
In conclusion, understanding market share in the crypto market is very important for investors, companies, developers, and users.
Market share information will help in making better investment decisions, developing effective business strategies, understanding competition, and measuring success and growth in the dynamic crypto market.
On the other hand, market share also has significant implications for investment and trading strategies in the crypto market. Understanding this can later help investors in making better decisions.
By using market share as a factor in investment analysis, investors can be assisted in identifying growth potential, managing risk, and obtaining balanced diversification in crypto portfolios.
Furthermore, monitoring and expanding knowledge about the crypto market share is important to keep up with the fast and complex market developments. This can help in making better investment decisions and planning long-term strategies.
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