MARKET CAP VRS CIRCULATING SUPPLY
In recent times, we have heard and read from a lot of market players advising both traders and investors to focus their lense on crypto coins/tokens with small market caps, especially in this bull run. However, only a few have made efforts to give further details on what exactly Market Cap is.
Market Cap basically refers to the total value of coins/tokens that are present in the market. Cryptocurrencies are mostly ranked on the basis of their market cap. Usually, the coin with the largest market cap, which is #BTC, ranked #1 with the others following suit in a descending order.
Mathematically,
Market Cap = Price of the token x Circulating Supply
On the other hand, circulating supply is the total number of tokens that are available and circulating in the market. It also shows the number of tokens or coins that are available to the general public. The circulating supply is influenced by the economic concept of demand and supply.
For example, as at the time of this write-up, the price of one UniSwap coin is $11.88 with a circulating supply of 598,736,139.
So, the market cap of UniSwap would be calculated as:$11.88 x 598,736,139 = $7,112,985,331.32
So how then do you determine whether a coin/token has a small market cap or not?
Just like the traditional stock market, any stock that has a market cap < $10B is classified as having a small market cap.
However, with the highly volatile nature of the crypto space, any new coin/token with strong tokenomics that has a market cap < $500M can be a very lucrative investment.
To conclude, both the market cap and circulating supply of coins/tokens give traders and investors precise information for decision-making. If you want to 5x, 10x, or more ROI on your capital in this bull run, target coins (Gems) with small market caps but have viable tokenomics.
Note: This is not financial advice.
