The market capitalization of a cryptocurrency is the total value of the number of tokens that have been mined. Market capitalization is calculated by multiplying the number of tokens in circulation by the token’s current market price, usually in dollars.
- Suppose token A is circulating 400,000 tokens. Each token is currently priced at $1. Then A’s market capitalization is $400,000.
- Suppose token B is circulating 100,000 tokens. Each token is currently priced at $2. Then B’s market capitalization is $200,000.
Although the price of token B is higher than the price of token A, the overall value of token A is twice as high as token B.
What does market capitalization say about a digital asset?
Market capitalization shows how much a cryptocurrency is worth across the market. Besides the token price, market capitalization is a visual factor that helps investors more comprehensively assess the value of a cryptocurrency, especially when putting that asset into a larger picture compared with the value of other cryptocurrencies.
Market capitalization is also an important statistic to indicate the growth potential of a cryptocurrency and how safe it is compared to other assets.
Note: Market capitalization is not a fixed quantity. That it is calculated based on the number of tokens in circulation and the token price, the market capitalization of many cryptocurrencies can fluctuate significantly based on their volatility.
Why care about Market Cap?
Market capitalization is a rough measure of how stable an asset is. Usually, A cryptocurrency with a larger market cap is more likely to be a stable investment than another with a smaller market cap. In contrast, smaller market cap cryptocurrencies are more susceptible to market whims – and can grow very large or fall very seriously, making them suitable for investors who have a high-risk appetite.
Market capitalization allows you to compare the total value of one cryptocurrency with another to make a more informed investment decision. Here are three groups of cryptocurrencies by market capitalization:
- Large-cap: Large-cap cryptocurrencies, including Bitcoin and Ethereum, have more than $10 billion in market capitalization. Investors consider these assets to be lower-risk investments because they have a proven track record of growth and are often more liquid – meaning people can withdraw these assets in large volumes without having a strong effect on asset prices.
- Mid-cap: Mid-cap cryptocurrencies ($1 billion to $10 billion) are considered potentially bullish but riskier.
- Small-cap: Small market cap cryptocurrencies (under $1 billion) are prone to very high volatility based on market sentiment.
Where to track Market Cap?
With the Investing feature on the ONUS app, you can track the Market Caps of over 300 popular digital assets. Suppose you’re more comfortable with the Web interface. In that case, you can follow Market Cap at Markets – A dedicated market tracking site for ONUS app users with a wide range of tracking, analysis, and comparison tools. Compare, assist you in evaluating tokens to make appropriate investment decisions.
The above are the most important things you need to know about Market Cap in the Crypto industry. Understanding Market Cap gives you more tools to evaluate cryptocurrencies, giving you more confidence before making investment decisions.
Hope you have a good investment experience with ONUS!