Definition
Crypto Market Cap:
The total value of all coins of a particular cryptocurrency that are currently in circulation.
Calculation
The market cap of a cryptocurrency is calculated using the following formula:
Market Cap = Current Price per Coin × Circulating Supply
For example, if a cryptocurrency has:
A current price of $100 per coin
1,000,000 coins in circulation
The market cap would be:
100 USD/coin × 1,000,000 coins = 100,000,000 USD
Total Cryptocurrency Market Cap
The total cryptocurrency market cap is the sum of the market caps of all individual cryptocurrencies. This metric gives an overview of the value of the entire cryptocurrency market.
Significance
Assessment of Size: Market cap helps assess the relative size and importance of a cryptocurrency within the market. Larger market caps typically indicate more established and widely adopted cryptocurrencies.
Stability Indicator: Cryptocurrencies with higher market caps are generally considered to be more stable and less volatile compared to those with smaller market caps.
Investment Tool: Investors use market cap to help make informed investment decisions, comparing the value and growth potential of different cryptocurrencies.
Categories
Cryptocurrencies are often categorized based on their market cap:
Large-cap Cryptocurrencies: Market cap of over $10 billion. Examples include Bitcoin (BTC) and Ethereum (ETH).
Mid-cap Cryptocurrencies: Market cap between $1 billion and $10 billion. Examples include Cardano (ADA) and Polkadot (DOT).
Small-cap Cryptocurrencies: Market cap less than $1 billion. These are usually more volatile and higher risk.
Understanding the market cap is essential for evaluating the value, potential growth, and stability of cryptocurrencies, whether for investment, comparison, or general analysis.
