The crypto marketcap

Market cap in crypto: what it is and why it matters

The market capitalization of a cryptocurrency is the total value of all tokens in circulation. It’s calculated by multiplying the current price per token by the number of tokens issued. For instance, if a crypto is priced at $10 and has 1,000,000 tokens, its market cap is $10,000,000 📊💡

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Why market cap matters

Assess project size: a high market cap often indicates an established crypto.
Compare cryptos: rather than just the token price, market cap gives a fuller picture.
Rank assets: crypto platforms list and rank coins by market cap (top 10, top 100).

In short, it’s a key metric to gauge the scale and liquidity of a digital asset.

How market cap is calculated

The formula is straightforward:

Market cap = Price per token × Number of tokens in circulation

Price per token: current exchange rate
Number of tokens: circulating supply (excluding team reserves, locked tokens, etc.)

Note: for cryptos with an infinite supply, the market cap can be volatile or harder to interpret.

Limitations of market cap

Doesn’t reflect true value: illiquid tokens can show high caps without real demand.
Ignores locked tokens: large reserves held by projects can skew numbers.
Not a safety guarantee: low cap doesn’t always mean a bad project, and vice versa.

For a complete analysis, combine market cap with other metrics: trading volume, active addresses, governance, etc. 🔍

Market cap and investment strategy

Large cap (above $10B): mature projects, lower volatility, moderate risk.
Mid cap ($1B–$10B): balanced risk/reward and growth potential.
Small cap (under $1B): high opportunities, but high volatility and risk 🚀

Adjust your portfolio to your profile: caution with small caps, diversification with large caps.

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Key takeaway

Market cap is a simple tool to measure a cryptocurrency’s size and importance. Used wisely, it helps compare projects and tailor your strategy—but don’t rely on it alone. Pair it with other indicators for a full view of the crypto market 😊