Why is the market cap important?
Price is merely one indicator of a cryptocurrency's worth. Market cap is a tool used by investors to compare the values of different cryptocurrencies and provide a more thorough narrative. As a crucial metric, it can reveal a cryptocurrency's potential for growth as well as whether purchasing it is risk-free in comparison to alternative options.
For example, let's examine the market capitalization of two hypothetical cryptocurrencies.
With 400,000 coins in circulation, if each coin of Cryptocurrency A is valued at $1, its market capitalization totals $400,000.
With a circulation of 100,000 coins and a value of $2 per coin, Cryptocurrency B has a market capitalization of $200,000.
While the price of a single coin in Cryptocurrency B is higher than in Cryptocurrency A, the total value of Cryptocurrency A is twice that of Cryptocurrency B.
Nevertheless, it is crucial to recognize that the market capitalization of numerous cryptocurrencies can fluctuate significantly because of their instability.