What Is Crypto Market Cap In 2022? – A Basic Read!

Crypto market cap is- cryptocurrency market capitalization. It is a simple way of finding out how massive a digital currency is- and by this information, you can make smarter investing decisions. If the topic is a cryptocurrency, lingos should be mentioned, and crypto market capitalization is one of them.

In this article, we will converse about what is crypto market cap? And all the additional information related to the market cap.

If you wish to invest in cryptocurrency, you should read this article first to get detailed information about the cryptocurrency, what is crypto market cap and the financing market. Let’s begin!

what is crypto market cap

What Is Crypto Market Cap?

For any cryptocurrency, market capitalization is the total value of all the coins that have been drawn. It is enumerated by multiplying the number of coins for circulation by the present-day market price of a single crypto coin.

Market capitalization is the total dollar value of all the shares of stock, and in the case of cryptocurrency, it is the value of all the crypto coins that have been mined. You can also understand crypto cap by thinking of it as a rough gauge for how stable a holding is likely to be.

However, it’s essential to know that even Bitcoin (How To Buy Bitcoin In India), the crypto of the most oversized cap, still faces volatility.

Similarly, a colossal ship can efficiently cruise through heavy weather; crypto with a much larger market capitalization will have a more stable investment compared to the one that has smaller market capitalization.

Contrary to this, digital currencies for the compact market cap are more susceptible to the impulse of the market and can experience enormous gain or dramatic losses in their wake. In the market cap, you might see some other references like- ” circulating supply” market cap or “fully diluted” market cap.

For example, 

  • 18.5 million bitcoins have been mined- circulating supply
  • Twenty-one million bitcoins will eventually be mined- a fully dated supply.

And based on their methods, some will measure the market through the currently circulating supply, while some will use the fully diluted supply.

Importance Of Market Cap

Price is one strategy to measure the value of cryptocurrency. People who Invest in Cryptos use the market cap to know the complete story, the entire market process, and compare the value across cryptocurrencies.

Technically, it can indicate the growth potential of a crypto coin and whether it is safe to buy compared to the others. To state it more clearly, let’s imagine a scenario where you compare the market cap of two concocted cryptocurrencies.

  • If a cryptocurrency “A” has 400,000 coins in motion and each coin is $1, the market cap is $4,00,000.
  • If a cryptocurrency “B” has 1,00,000 found in motion, and if each coin is worth $2, the market cap will be $2,00,000.
  • Now, suppose you look at both A and B cryptocurrency. In that case, the individual price of B cryptocurrency is higher than the A cryptocurrency, but the overall value of “A” is double the value of B.

It’s important to note that the market cap of numerous cryptocurrencies can swing unexpectedly due to their volatility.

How Can You Use The Market Cap?

Market cap will permit you to compare the entire value of one cryptocurrency with another one so you can make an informed conclusion at the time of investment.

Cryptocurrencies are classified into three categories based on their market cap. These three categories are-

  • Large Cap Cryptocurrency

It primarily includes Bitcoin and Ethereum and has a market capitalization of more than $10billion. They are considered a lower-risk investment because they have shown a consistent tracking record of growth and often have higher cash flow.

  • Mid Cap Cryptocurrency

They have a market cap between $1 billion- $10 billion. They are mostly considered to have more untapped potential and hold a higher risk.

  • Small-Cap Cryptocurrency

They hold a market capitalization below $1billion and are more prone to dramatic swings based on market trends.

Market cap can be a functional metric system for comparing the total value of cryptocurrencies. However, market trends, crypto stability, and your financial state should need to be observed when weighing the probability of any investment.

I hope you find this information helpful for you in your investing journey! 

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