What Is Market Cap in Cryptocurrency and Why Does It Matter?

Market capitalization has traditionally been applied as a means of the total value of a publicly-traded company. Its use as a measure of overall value is now applied to commodities, bonds, and cryptocurrencies.

Market capitalization is an indicator that keeps a tab on the market value of a cryptocurrency. The higher the market cap, the more superior it is considered to be in the cryptocurrency market. This is the reason market cap is regarded as the single most important determinant for ranking cryptocurrencies.

The meaning of market capitalization in cryptocurrency

In the stock market, market capitalization means the total market value of all outstanding shares of a company. The same applies to cryptocurrency, except cryptos don’t represent equity in a company like stocks. Instead, the market capitalization of a coin is what you would get if you added up every available coin at the current price. This is called a cryptocurrency market cap.

How is the market cap calculated?

The market capitalization of a cryptocurrency is solely determined by the current price multiplied by the circulating supply. Therefore, it is essential to keep track of the circulating supply of a cryptocurrency, not the total supply.
Is the market cap an ideal way to measure the popularity of a cryptocurrency?
The market cap of a cryptocurrency indicates the popularity of a cryptocurrency over a more extended period.

Large-cap cryptocurrencies are considered to be safe. These coins are usually less volatile than other cryptocurrencies and more volatile than traditional assets.

Mid-cap cryptocurrencies are more volatile and they have more growth potential than large-cap cryptos.

Small-cap cryptocurrencies are highly volatile therefore a bit risky and sometimes with a lot of growth potential. Be aware these coins tend to crash at any time.

What can you do with market capitalization?

Market cap enables one to compare the total value of one cryptocurrency with another. This is how you can make more informed decisions. Knowing cryptocurrency market cap might be exciting if you wish to see the potential of a specific token. It should not be as significant a factor in your decisions as it might be in the stock market.

Price is only one way to measure a cryptocurrency’s value. Market cap tells a complete story and compares value across cryptocurrencies. In addition, it can help indicate the growth potential of a cryptocurrency and whether it is safe to purchase.

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