|THE MD SCORE: HOW TO RANK CRYPTOCURRENCIES
The MD Score is a way of ranking cryptocurrencies using Metcalfe’s Law. It’s quite simple – the score measures the distance, up or down, between what the currency’s market cap and the market cap as calculated by the regression equation and based on the trading volumes.
The higher the MD Score, the more upside potential the currency has.
Mean Reversion is the governing philosophy here. Yes, it doesn’t always hold – Amazon (AMZN – $1186) just seems to keep going up for example. However, it is a powerful force in financial markets.
As we can see by the above chart, some of the smaller currencies show considerable upside potential, particularly IOTA (MIOTA), Neo (NEO) and Monero (XMR).
Of the larger currencies, Bitcoin Cash (BCH) has the most upside potential. Ethereum (ETH) has the most downside.