What Is Market Capitalization?
Market capitalization (market cap) reflects the total valuation of a cryptocurrency's circulating supply at current prices. It’s a universal metric applied not only to crypto but also to traditional equities and commodities like gold.
Why Is Market Cap Important?
Investors use market cap to:
- Assess a cryptocurrency’s relative size and stability.
- Gauge risk-return profiles (e.g., large-cap assets tend to be less volatile).
- Compare crypto against other asset classes (e.g., stocks, gold).
How to Calculate Crypto Market Cap
The Formula:
Market Cap = Current Price × Circulating Supply
Key Notes:
- Circulating Supply ≠ Total Supply: Use only minted/available coins (e.g., Bitcoin’s current supply is ~19.8M, not its max 21M).
- Data Sources: Platforms like CoinGecko provide real-time price and supply metrics.
Example: Bitcoin
- Price: $26,674.10
- Circulating Supply: 19,491,887 BTC
- Market Cap: $26,674.10 × 19,491,887 = **$519.93B**
Fully Diluted Market Cap
This projects a crypto’s future valuation using its max supply (e.g., Bitcoin’s 21M coins):
- $26,674.10 × 21,000,000 = **$560.16B**
Calculating Company Market Caps
Formula: Share Price × Outstanding Shares
Categories:
- Large Cap: >$10B (e.g., Apple)
- Mid Cap: $2B–$10B
- Small/Micro Cap: <$2B
👉 Diversify your crypto portfolio
FAQ
1. Is a high market cap better?
High-cap assets (e.g., Bitcoin) are typically more stable but may offer lower growth potential than small-cap altcoins.
2. What’s Bitcoin’s all-time-high market cap?
On November 10, 2021:
- Price: $69,044.77
- Circulating Supply: ~18.87M BTC
- Market Cap: $1.3 trillion
3. Does market cap equal equity value?
No. Equity factors in assets minus liabilities, while market cap is purely share price × supply.
4. Why focus on Bitcoin’s market cap?
Bitcoin’s decentralization and scarcity make it a benchmark for crypto valuations, unlike speculative altcoins.
5. How often does market cap change?
Constantly—with price fluctuations and new coin minting (e.g., post-Bitcoin halvings).