Market capitalization
Also called: market cap · mcap
Definition
Market capitalization is the total value of a cryptocurrency's circulating coins, calculated as the current price multiplied by the circulating supply.
How market capitalization works
Market cap lets you compare the size of projects fairly. A coin priced at 0.01 USDT can be worth far more in total than a coin priced at 500 USDT, depending on how many coins exist. Data sites rank coins by market cap, which is why you see BTC and ETH at the top.
The figure depends on the circulating supply estimate, which data providers calculate differently. Coins held by the team, foundation or investors under lock-up are usually excluded. That is why you should also check fully diluted valuation, which counts all coins that will ever exist.
Market cap is not the amount of money invested, and it is not the amount you could cash out. If a large share of coins were sold at once, the price would fall, so the real liquid value can be far lower. For small coins, look at daily trading volume and order book depth alongside market cap.
Example
Suppose Coin A trades at 2 USDT with 500 million coins in circulation, giving a market cap of 1 billion USDT. Coin B trades at 0.02 USDT with 100 billion coins in circulation, a market cap of 2 billion USDT. Coin B looks cheaper per coin, but the project is valued at twice the size of Coin A. For Coin B to reach 2 USDT, its market cap would need to hit 200 billion USDT.
Common mistakes
- Judging a coin as cheap or expensive by its unit price instead of its market cap.
- Treating market cap as money that has flowed in, when it is just price times supply.
- Ignoring that circulating supply can grow quickly when locked tokens unlock.
Learn and practise
FAQ
How is crypto market cap calculated?
Multiply the current price by the circulating supply. A coin at 4 USDT with 250 million coins circulating has a market cap of 1 billion USDT.
What is the difference between market cap and FDV?
Market cap uses circulating supply, while fully diluted valuation uses the maximum or total supply. A big gap between them means many tokens are still to be released.
Why do different sites show different market caps?
They use different circulating supply estimates and slightly different price sources.