Since the introduction of the internet, there have been many significant advancements in technology, but the one that stands out is the blockchain-backed cryptocurrency.
The crypto market cap is a very important number for all financial markets, whether they are crypto, stocks, or forex. But market capitalization doesn’t work the same way for cryptocurrency as it does for other markets.
For investors and companies all over the world, cryptocurrency has completely rewritten the rules of the game. In the world of cryptocurrency investments, market capitalization is an extremely important factor to consider.
So, in this blog let’s go through the details of cryptocurrency market capitalization.
What is Market cap?
Understanding the relationship between the size of the company, the potential for returns, and the risk involved is essential if you are developing an investment strategy to assist you in the pursuit of long-term financial goals. With this information, you will be better prepared to construct a diversified portfolio that includes holdings from a variety of “market caps.”
The market value of a company is referred to as the company’s market capitalization, which is calculated by taking into account both the current share price and the total number of shares that are still outstanding in the company. It is one of the most important aspects of a company, and potential investors can use it to their advantage to gain a better understanding of the dangers associated with purchasing the company’s stock.
For reference purposes, a business with a total of 20 million shares and a price per share of $50 would have a market capitalization of 1 billion dollars.
Now, what does market cap mean in cryptocurrency?
In the crypto space, market capitalization, or “market cap,” is a way to measure how big and popular cryptocurrencies are. It also tells us how much they are worth right now.
Even though the market cap is still seen as the most important sign of a project’s importance, the idea behind it is often criticized. The reason is that a cryptocurrency’s market cap pretty much shows how popular a coin is over a longer period.
How to Calculate the Market Cap of Crypto?
The following formula is used to figure out a cryptocurrency’s circulating market cap:
Crypto Market Cap = Recent Price * Total supply
Suppose the current market price of a cryptocurrency is $20 and there are 10 million coins in circulation.
The market cap will be: 20*10,000,000 = 200,000,000
Why is Market Cap Important in Crypto?
Market capitalization tells us a lot about any cryptocurrency on the market. It tells us how the rest of the world sees a certain cryptocurrency and how powerful it is compared to its competitors. Market cap changes along with the prices of cryptocurrencies and tokens and how widely they are used around the world.
Cryptos with bigger market caps tend to have more investors and a bigger effect on the prices of other coins and tokens. That’s one reason why the market cap is often used to rank cryptocurrencies in the crypto market.
Price alone isn’t enough to figure out where a cryptocurrency stands on the market. Market capitalization is a better way to measure something.
What is the Crypto classification by market cap?
We have put the cryptocurrency market into different levels so that we can analyze it better.
Mega >$200 billion:
The highest level of capitalization in the cryptocurrency market is the mega-market capitalization level. This level is made up of cryptocurrencies worth more than $200 billion. At the time this was written, only Bitcoin and Ethereum fit this description.
Large $10B – $200B:
The second largest group is cryptocurrencies which are traded between $10 billion and $200 billion. These are usually the top twenty cryptocurrencies (by market cap).
Mid-Market $1B – $10B:
People think that these cryptocurrencies are much more volatile than large and mega capitalization, which gives investors a chance to find high-growth projects.
Small Market $100M – $1B:
Small-market capitalization is where we start to find cryptocurrencies that have the most growth and investment return potential. Even though this category has a higher chance of growth, it also has a high chance of being very volatile.
What Does Crypto Market Cap Mean for Investors?
An investor might decide to split their money between these groups for different reasons, so it’s important to know the market cap. Market capitalization often talks about how much a company is worth. This value can show how risky it is to invest in a company. Most of the time, large-cap or “Mega-cap” cryptos are less risky.
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Q: How to Calculate the Price of a Cryptocurrency?
A: Divide the total market value by the number of coins in circulation to get the price of a cryptocurrency.
Q: What Is The Current Crypto Market Cap?
A: The global crypto market cap currently is $1.04T.
Q: Will The Crypto Market Cap Reach $10 Trillion?
A: There is no doubt that the crypto market capitalization could reach $10 trillion in the next few years. Due to blockchain’s decentralization, security, transparency, trust, and other benefits, investors are becoming more confident in the cryptocurrency market. Most millennials are putting more money into the crypto market.
Q: What are the Market caps of some famous Cryptos?
A: Market cap as of Jan 30, 2023
Bitcoin Market Cap: 447.73 Billion Dollars
Ethereum Market Cap: 191.70 Billion Dollars