Mastering the capitalization of the cryptocurrency market or market capitalization is a key in the investment world, especially in cryptocurrency markets.
Most traders find it’s vital to check out a coin market capitalization before investing in it. By this, you can ascertain when it’s best to HODL, best selling moment and when you ought to buy.
So, now that the concept of cryptocurrency market capitalization is understood, let’s explain what a market cap is, how it relates to crypto, and the different types of capitalizations. Additionally, this article highlights why Copaly as a crypto transaction platform for selling, buying, swapping and trading cryptocurrency is a safe heaven.
What Is the Cryptocurrency Market Capitalization About?
Market capitalization in Cryptocurrency is a metric that is used to understand the current market value of any crypto asset. In the context of cryptocurrencies, cryptocurrency market capitalization refers to the present value of the cryptocurrency network.
Likewise, you can calculate the market capitalization of any cryptocurrency as well as the big market as a whole.
In both cases, a popular short-form, market cap, is used to denote the metrics. Experts claims say that crypto market capitalization allows them to understand the development and performance of a crypto asset from a broader perspective.
However, cryptocurrency total market capitalization is not a concept exclusive to the crypto sector. You can find its use in traditional stock markets as well. Nevertheless, this makes it easy to spot the differences between these two calculations.
What is Market Capitalization of Cryptocurrencies?
Market capitalization of any cryptocurrency or digital asset commonly referrs to it market cap. This involves a lot of measures and an asset’s value on the market.
Briefly, it entails how much an asset is currently worth. Market capitalization also measures and calculates various digital assets, including stocks and cryptocurrency.
However, in stocks the market cap measures the value of securities in relation to other securities. Usually, it is calculated by multiplying the number of shares outstanding by the current price of shares.
Outstanding shares refers to a coorporation’s shares that are held by investors and other non-corporate entities.
Similarly, the value of a an digital asset in relation to other assets is measured and defined by its market cap.
How to Calculate Individual Cryptocurrency Market Capitalization?
For every Blockchain product, cryptocurrency or digital asset, the term Individual crypto market cap is used freely.
Firstly, it’s important to know that there is Bitcoin (BTC) which is the most popular cryptocurrency coin globally.
At the time of writing, the crypto market cap of Bitcoin is $408,178,764,199. Implying, the total valuation of Bitcoin has already crossed the $4 Trillion mark.
Following up is Ethereum (ETH), which has a market capitalization of $148,511,933,290 as of when writing.
Market Cap Calculating Formula
Gladly, an overview of what an individual market capitalization is isn’t a challenge. Moving forward is calculating it with the right formula.
Cryptocurrency Market Cap = circulating supply x unit price
As the equation shows you, an asset’s market cap is calculated by multiplying the circulating supply with the current token or coin price.
Furthermore, the below explanation is a clear guide to understanding the used terms and application.
Circulating supply: this referrs to the total number of coins available for trade
Unit price: the price at which one unit of the asset is sold
To explain; if the circulating supply of Bitcoin is approximately 19 million BTC and its price per unit is hovering around $21,449.28 as of today.
Therefore, we can calculate the market cap of Bitcoin by multiplying 19 million x 21,000. This then shows us that the Bitcoin market cap is three hundred ninety-nine billion.
Nonetheless, if you prefer a hassle-free way, you can also visit an online market cap calculator. One of the most popular ones is cryptocurrency market capitalizations calculator.
Why CoinMarketCap, this is because it shows the market capitalization values of the cryptocurrencies in real-time, every day for 24 hours.
Are there Issues With Crypto Market Capitalization?
Noteworthy, some Experts claim’s that crypto market capitalization is not a perfect way to analyze the performance of a unique crypto asset or the industry.
Firstly, some analysts believe that there is a lack of transparency in the information about crypto projects due to uncertain factor’s.
The disparity in the number of coins in circulation or the current price can impact the final figure we conceive as the market cap. Therefore, a trustworthy and transparent data source becomes integral to getting crypto market capitalization numbers on track.
Secondly, Experts claim that persons with biased interests may manipulate the market cap of cryptocurrency projects without much effort. The crypto industry’s history has already seen such manipulation attempts designed to attract more customers by promoting the market cap alone.
The crash Luna project is said to be an example. The possibility of such manipulation is a reason why some experts do not entirely trust crypto market capitalization.
The inherent volatility of the cryptocurrency industry has also made people a little cautious about the metrics.
Tweet Fact on Bitcoin Nature
"The nature of #Bitcoin is such that once version 0.1 was released, the core design was set in stone for the rest of its lifetime.” – Satoshi Nakamoto on June 17, 2010
— Michael Saylor⚡️ (@saylor) June 25, 2022
Misconceptions About Market Capitalization
Although it is used often to describe a company, the market cap does not strictly measure the equity value of a company. Only a thorough analysis of a company’s fundamentals can do that. It is inadequate to value a company because the market price on which it is based does not necessarily reflect how much a piece of the business is worth.
Shares are often over- or undervalued by the market, meaning the market price determines only how much the market is willing to pay for its shares.
Cryptocurrencies may issue additional coins or tokens over time. For this reason, many analyze a fully diluted market cap. The diluted market cap is calculated as the current price of the cryptocurrency multiplied by the total maximum number of coins or tokens of that cryptocurrency.
Understanding the Cryptocurrency – Explained
The Four Market Capitalization Classifications in Cryptocurrency
There are four categories used in market capitalization to classify the value level of various assets on the cryptocurrency market.
These classifications will make it easier for you to compare the total value of cryptocurrency with others, so you will be able to make better decisions for investment. Plus, this info will make reading a cryptocurrency chart a little easier.
Here are the four market capitalization classifications in cryptocurrency:
Large-cap Cryptocurrencies
This refer to cryptocurrencies with huge market capitalizations and are commonly considered to be safe crypto investments. A cryptocurrency is considered a large-cap if its market cap is over 10 billion USD.
Besides that, large-cap cryptocurrencies also have higher liquidity, which attracts more investors than those with lower capitalizations. This means that you can find these assets almost in every digital asset trading platform.
Examples of Large-cap Crypto
Cryptocurrencies included in this category are
Bitcoin (BTC)
Ethereum (ETH).
Mid-cap Cryptocurrencies
Mid-cap cryptocurrencies have a market capitalization of 1-10 billion USD. Currencies categorized as mid-cap are generally considered to have untapped profit potential but are higher-risk assets.
Generally, mid-cap cryptocurrencies tend to show good performance in the long term. By having it in your portfolio, mid-cap currencies can increase your asset diversification.
Also, not all mid-cap coins have the potential to turn into large-cap assets.
Examples of Mid-cap Crypto
Litecoin
Cardano
Monero.
Small-cap Cryptocurrencies
Coins and tokens belonging to the small-cap cryptocurrencies are currencies with a market cap of around 100 million – 1 billion USD. Cryptocurrencies in this category are very volatile and considered high-risk investments, even though they have the potential to grow in the short term.
Examples of Small-cap Crypto
An example of the currencies in this category is;
Dogecoin
Avalanche
BitTorrent
Kusama
Micro-cap Cryptocurrencies
Micro-cap assets are considered to have higher risks compared to the currencies in the small-cap category.
Generally, currencies belonging to this category are new coins launched by a group of people or anonymous groups with a market cap of less than 50 million USD.
Examples of Micro-cap Cryptocurrency
Lucky Block
DeFi Coin
Audius
Ox
Theta
Investing in Cryptocurrencies on Copaly
You can sell and buy Bitcoin, Ethereum, Ripple, Litecoin, USDT, USDC and other cryptocurrencies on Copaly with the best price and lowest spread. Sign up here and download the app.
Copaly application is available on Google Play Store and App Store.
You can also learn about the cryptocurrency world and investment tips on Xycinews. Learn many interesting topics on cryptocurrency on Xycinews today!
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Disclaimer
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As a result, the products offered on this channel may not be suitable for all investors because of the risk of losing all of your invested capital. You should never invest money that you cannot afford to lose, and never risk taking a loan hoping.
