Market cap meaning in crypto explained

 

Market capitalization (or market cap) in crypto is a metric used to determine the total value of a cryptocurrency in the market

How It's Calculated:

\text{Market Cap} = \text{Current Price of One Coin} \times \text{Total Circulating Supply}

🔍 Example:

If a cryptocurrency is trading at $100 and has 10 million coins in circulation:

100 \times 10,000,000 = 1,000,000,000 1.

🧠 Why It Matters:

Size Indicator: Helps compare the relative size of different cryptocurrencies.

Risk Level:

Large-cap (e.g., Bitcoin, Ethereum): Generally more stable. 1.

Mid-cap: More potential growth but higher risk. 2.

Small-cap: High risk, high reward potential. 3.

Investor Insight: A coin with a high market cap is often seen as more established or trusted. 4.

⚠️ Limitations:

Doesn’t account for token liquidity or price manipulation. 1.

A project can have a high market cap but still be vulnerable or overhyped if the supply is tightly held. 2.