If you’re wondering what the market cap means in crypto is, you’re in the right place. In this guide, we’ll start by explaining what the term market cap means in crypto and how it’s calculated. After that, we’ll talk about its importance for investors and explain everything you need to know about the metric. And finally, we’ll list the most popular cryptocurrencies by market cap.
Learn in This Article
What Is the Market Cap in Crypto?
So what is a market cap in crypto? Market capitalization or market cap is a term that refers to the value of an asset like a cryptocurrency. It is mainly used to describe stocks, but it’s a popular term in the crypto market as well.
Market cap is far from a perfect metric as it only takes into account two main factors: price and supply. The crypto market (and every other financial market, for that matter) is too complex for such basic metrics to fully capture the true value of an asset. However, there are few better options and many experts agree that it can still be a useful tool for investors and analysts.
How Is the Market Cap Calculated?
To calculate the market cap of a digital currency, all you need to do is to multiply its circulating supply with its current price on the market. Some people calculate it with the total supply of the token instead.
For example, if a cryptocurrency costs $5.00 and has a circulating supply of 10,000,000, its market cap will be $50,000,000. We got this number by multiplying its circulating supply (10,000,000) by its current price ($5.00).
Why Is the Market Cap Important in Crypto?
Market cap is important because it roughly estimates the value of a particular cryptocurrency. This is why many investors will compare market cap trends of different altcoins to see how well they perform on the market.
For example, an asset with a smaller market cap generally suggests higher investment risk because it is often much more volatile than larger assets. Conversely, coins with larger market caps have higher liquidity and lower volatility. Of course, this doesn’t mean that all large cryptocurrencies are safe. It’s just one metric that can be useful in analyzing coins.
The market cap of digital currencies is often classified into three groups — large-cap, mid-cap, and small-cap cryptocurrencies.
Large-cap cryptocurrencies have a market capitalization of over $10 billion. These currencies often have greater liquidity, higher trading volume, and fewer price fluctuations. This is why some people consider them to be lower-risk investments. Again, this is far from a perfect rule.
These are usually popular crypto projects with strong communities supporting them. Examples of large-cap cryptocurrencies are Bitcoin, Ethereum, and Tether.
Mid-cap cryptocurrencies are coins or tokens that have a market cap between $1 billion and $10 billion. Some crypto investors like to target mid-cap cryptos as they can have greater growth potential than large-cap coins but are often less volatile than small-cap coins. Examples of mid-cap cryptocurrencies include Litecoin, Dogecoin, and Cardano.
Small-cap cryptocurrencies have market caps below $1 billion. Since these are relatively unknown or new cryptocurrencies, they are typically especially volatile. Examples of low-cap cryptocurrencies are Bitcoin ETF Token, Meme Kombat, and eTukTuk.
Comparing the market caps of different cryptocurrencies can be helpful when making an informed decision on which cryptos to invest in. Platforms like CoinMarketCap, CoinGecko, and MarketCap Of can be especially helpful for this analysis.
What Is the Total Market Cap?
The term crypto total market cap refers to the overall market capitalization and volume of cryptocurrencies on a global scale. There are currently over 10,000 cryptocurrencies, and their total market cap stands at about $3,300,000,000,000.
At the same time, the total market cap of all DeFi coins stands at $70,000,000,000, while the market cap of all stablecoins and altcoins amounts to $100,000,000,000 and $2,000,000,000,000, respectively.
What Are the Most Popular Cryptocurrencies by Market Cap?
The most popular cryptocurrencies, i.e., digital currencies with the largest market cap are:
- Bitcoin (BTC) — $2,109,143,133,797
- Ethereum (ETH) — $320,934,173,590
- Tether (USDT) — $153,017,252,081
- Ripple (XRP) — $133,311,936,407
- BNB (BNB) — $95,836,288,296
Conclusion
Understanding what market cap means in crypto and how to use it to help make an informed decision about future investments can be essential in today’s fast-paced market. Being able to quickly analyze new tokens to help guess at their growth potential and volatility can be an incredibly helpful tool.
However, it’s important to note that market cap is just one of many metrics that you should consider to make the most informed investment decisions. Fundamentals, technical analysis, and sentiment analysis are just as helpful (if not more so) in successfully analyzing new cryptocurrencies.