Market Capitalization (Market Cap)
19 hours agoMarket Capitalization (Market Cap) refers to the total dollar value assigned to an asset (such as Bitcoin) or an entire asset class (like all cryptocurrencies). It is calculated by multiplying the circulating supply of that asset by its market price.
MARKET CAPITALIZATION = CIRCULATING SUPPLY x ASSET’S MARKET PRICE
For instance, with Bitcoin (BTC) currently priced at USD $23,150 and a circulating supply of 19,111,706 coins, the market cap would amount to $442,435,993,990, or approximately $442 billion.
19,111,706 x US $23,150 = $442,435,993,900
It is important to distinguish Market Capitalization from Fully Diluted Market Cap, which considers an asset’s maximum supply rather than its circulating supply.
Market Capitalization serves as a metric to assess the overall health and growth potential of a cryptocurrency, helping to determine whether it may be a worthwhile investment in comparison to other cryptocurrencies.
Additionally, Market Capitalization is utilized to categorize and group cryptocurrencies based on their individual market cap sizes. This includes classifications such as large-cap, mid-cap, and small-cap cryptocurrencies.
Such classifications facilitate easier comparisons for investors and analysts regarding various trends and performance metrics among similarly sized cryptocurrencies.
Cryptocurrencies with larger market caps are generally perceived as more stable than those with smaller market caps. However, smaller-cap cryptocurrencies often attract significant interest from traders seeking opportunities in the price fluctuations, given their higher volatility.
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