Cryptocurrency market capitalization is a simple, straightforward way of finding out how big a digital currency is — and it can help you make smarter investment decisions.
Cryptocurrency market capitalization is a simple, straightforward way of finding out how big a digital currency is — and it can help you make smarter investment decisions. In fact, CoinMarketCap first popularized looking at a coin’s market cap for ranking cryptoassets way back when.
Figuring out a crypto market cap is easy. All you need to do is multiply a coin's current price by the total number in circulation.
Let's imagine that an altcoin is currently worth $100, and it has a circulating supply of 25 million. Multiplying the two tells us what the crypto market cap is — in this case, $2.5 billion.
(An aside that while in theory, it is easy to do these multiplications, things become much harder with different types of coins issuance, etc. — for example, crypto Twitter blew up in August 2020 when people realized they couldn’t calculate the same total Ethereum supply twice).
What Is the Total Market Cap?
The total market cap takes in market data from a range of cryptocurrencies — including Bitcoin, Ethereum, XRP and EOS — to provide a fuller, real-time picture of how the cryptoasset sector is performing. Here at CoinMarketCap, we do all the hard work for you, and also offer details about trading volumes in a 24-hour period.
Another important metric to keep an eye on, especially with altcoins, is the total supply. Cryptocurrencies like Bitcoin have limits on their circulating supply, meaning no more than 21 million coins will ever exist. Others have a much greater number of coins (here's looking at you XRP, with a supply of 1 billion).
Coins with a larger total supply are usually priced much less expensively. Aside from the value of their blockchain technology, scarcity tends to be a driving factor in a cryptocurrency's value. Case in point, BTC has an all-time high of $20,000, while Ripple's record is just $3.84.
When evaluating the vast array of cryptocurrencies out there, you should rely on its market capitalization rather than the price of each coin. It may be tempting to think Bitcoin Cash is better than XRP because of how each coin is worth hundreds of times more. But in actual fact, BCH has a crypto market cap that's a third smaller.
Circulating supply — which looks at the number of coins available to the public — isn't the only method for calculating a crypto market cap. Alternatives include calculating the total supply (factoring in assets that might be locked up or reserved).
Another is maximum supply. Here, market capitalization is calculated by multiplying an altcoin's price by the maximum number of coins that could ever exist. (This can be difficult to do. Not only would a higher circulating supply likely affect the price of cryptocurrencies, but some altcoins have no upper limit.)
Is Crypto Market Cap an Important Metric?
There's a lot of debate about how much weight should be placed on the size of the cryptocurrency market. Some critics claim that it's an unwelcome legacy of the stock market — leading to misguided investment decisions and contributing to substantial levels of fear and greed.
However, crypto market caps can also give us a fact-based look at how altcoins are performing — a much-needed source of objectivity away from social media.
From Litecoin to Cardano, Binance Coin to Monero, and Tether to Tron, you can find comprehensive details about market capitalization on CoinMarketCap. This can help you make informed investment decisions about cryptoassets in real time as blockchain technology and digital currencies continue to gain momentum.
