#bnb
What is Market Cap in Crypto?
Market cap is a metric used to help traders and investors understand the value or value potential of a particular cryptocurrency. It’s a concept with roots in traditional investing, where market cap is used to quantify the dollar value of shares in circulation for a company.
The size of a market cap can help investors make inferences about the risk profile of a coin, its potential for long-term growth, and its market dominance.
How is Market Cap Calculated?
There are two common ways to express cryptocurrency market cap: circulating supply or fully diluted supply. Market cap can be calculated by using the number of coins currently in circulation (circulating supply). Or it can be calculated using the number of coins that will be in circulation once the limit is reached (full diluted supply).
Market cap based on circulating supply is calculated with the following formula:
Current Price x Circulating Supply = Market Cap
Difference Between Small, Mid, & Large-Cap Cryptocurrencies
When using market cap to discuss cryptocurrencies, they are generally divided into three categories: small, mid, and large-cap.
Small-cap cryptocurrencies
Small-cap cryptocurrencies tend to have market caps under $1 billion. Compared to other coins, they usually have less exchange support, lower volume, or both. For this reason, small market movements can create volatile swings for these small-cap cryptocurrencies.
Mid-cap cryptocurrencies
Mid-cap cryptocurrencies have capitalisations between $1 billion and $10 billion. Traders often look to mid-cap coins to predict growth potential. Yet since these cryptocurrencies haven’t established large-cap positioning, there is still a greater level of risk involved.
Large-cap cryptocurrencies
Large-cap cryptocurrencies with capitalisations of more than $10 billion. These are your ‘household name’ coins; Bitcoin, Ethereum, XRP, and more. These cryptocurrencies have a relatively higher trading volume compared to other crypto assets.
