#StartInvestingInCrypto
Relationship between market cap and circulating supply is key to understanding the value of cryptocurrencies. Market cap is the total value of a cryptocurrency, calculated by multiplying the current price of one coin by the number of coins in circulation. Circulating supply refers to the number of coins that are available for trading. For example, if a cryptocurrency has 1 million coins in circulation and each coin is worth $10, the market cap would be $10 million. A high market cap indicates a more established and possibly stable cryptocurrency, while a lower market cap might suggest higher risk but potentially higher rewards. The circulating supply helps determine the price per coin; a high circulating supply with a low market cap means each coin is cheaper, whereas a low circulating supply with a high market cap means each coin is more expensive. Investors use these metrics to gauge a cryptocurrency's market presence and growth potential. If many coins enter the market suddenly, it can lower the price and market cap, while removing coins can make them scarcer and more valuable. Comparing market caps and circulating supplies of different cryptocurrencies helps investors find undervalued or overvalued coins. Understanding these basics helps in making informed investment decisions in the volatile crypto market.