When people use the term “market cap” (also “market capitalization”), they are usually referring to the total market value of all a given cryptocurrency’s circulating supply.
To find this, you would simply multiply the current price of the coin by how many coins are in circulation. For example, if a coin currently has a price of $10 and there are 10 million of it in circulation, then its market cap is $100 million.
In this article, we will take a deeper look at what exactly we mean when we refer to market caps and why they are important for determining the markets and future growth potential for coins. We will also go into why some people see market caps as problematic and what alternative measurements have been created in order to address these problems.
The market cap of a cryptocurrency is calculated by multiplying the number of coins or tokens in existence by its current price.
The cryptocurrency market cap is an important metric for traders, investors and crypto enthusiasts to understand when looking at the crypto space as a whole or individual projects. It’s also a useful tool for comparing different cryptocurrencies, which can be difficult given the various stages of development that are present in the space.
That’s why we created this guide. Here are the three main things you need to know about cryptocurrency market caps:
What Does Market Cap Mean?
Why Does It Matter?
What Are Market Cap Categories?
Market capitalization, or market cap for short, is a widely used metric for valuing cryptocurrency projects. As the name suggests, market cap represents the total value of all coins in circulation. It is calculated by multiplying the price of a coin by the number of coins in circulation, and it gives you an idea of how much money has been invested in a project, as well as its current value.
The market cap metric is often used to rank cryptocurrencies by size and is sometimes included in listings of the top digital assets by other popular metrics such as liquidity and trading volume.
Market cap is one of the most important metrics to consider when evaluating a cryptocurrency project. In this article we’ll explain what it measures, why it’s important to track it and how you can use it to evaluate crypto projects.
If you have been following the cryptocurrency industry for any length of time, you may have heard the term “market capitalization” thrown around on various occasions. If you are new to the space, however, you may be wondering what a market cap is and how it can be used to evaluate cryptocurrencies. Let’s take a look at this important metric.
What Is Market Cap?
Market capitalization refers to the total dollar market value of a company’s outstanding shares. Commonly referred to as “market cap,” it is calculated by multiplying the total number of a company’s outstanding shares by the current price of one share. The investment community uses this figure to determine a company’s size, as opposed to using sales or total asset figures.
In order for investors to determine if a particular stock is undervalued, they must consider its market cap in comparison with other companies in the same sector or industry. For example, if two companies have similar earnings but one has a higher market cap than the other, then investors will conclude that the company with the higher market cap is likely undervalued and therefore could be an attractive buy.
What Is Cryptocurrency Market Cap?
In cryptocurrency terms, market capitalization refers to how much money has been invested in a particular digital currency.
The market cap of a cryptocurrency is calculated by multiplying the number of coins or tokens in existence by its current price. That’s a simple enough equation. But for those new to cryptocurrency, it begs the question: what is market cap and why does it matter?
What is Market Cap?
Market capitalization (market cap) is the total value of a company’s shares. It can be calculated by multiplying a company’s shares outstanding (number of shares that exist) by the current market price of one share. A company’s market cap is a good measure of size because it gives investors an idea of how much the company would be worth if it were bought out that day – but it doesn’t say anything about the actual profitability of that business.
Market caps are used in many ways, but investors often use them as a proxy for measuring perceived risk.
The standard argument goes like this: The larger a company, the more stable its stock price tends to be. Smaller companies tend to be more volatile, which means they can potentially rise or fall more quickly in value.
Chances are you’ve probably heard the term “market cap” tossed around in your cryptocurrency research. Market cap, short for market capitalization, refers to the total value of a cryptocurrency’s circulating supply.
In other words, it’s the total value of all coins on the market at any given time.
It’s typically displayed alongside the price (as in “$1,000” or “€9,500”). However, it can also be displayed as a raw number which is useful if you’re comparing two cryptocurrencies with vastly different prices: 1 BTC vs. 10 ETH, for example.
So if market cap is simply the total number of coins multiplied by their price, why not just use price? Why bother with market cap at all?
The answer lies in using market cap to compare cryptocurrencies.
If we use price alone to compare cryptocurrencies we may be led to believe that one coin is more valuable than another when this may not be true at all. Without looking at the number of coins on the market and their overall value we can’t be sure that we’re comparing apples to apples (or coins to coins).
The cryptocurrency market capitalization is a metric that measures the aggregate valuation of all coins in circulation. This figure is calculated by multiplying the total number of coins in existence by the coin’s current price.
The coin market cap of a cryptocurrency is calculated as:
Market Capitalization = Coin Price X Total Coin Supply
For example, Bitcoin (BTC) has a circulating supply of 18,340,625 BTC and a price of $10,832.80 per coin. The market capitalization of Bitcoin is thus:
BTC Market Cap = 10,832.80 X 18,340,625 = $199,110,236,700
The market cap of a crypto coin can be used to determine the relative size of different cryptocurrencies. In general, the bigger the market cap of a coin/token, the more dominant it is in the crypto market.