What is Market Cap?
Market capitalization (market cap) represents the total value of a cryptocurrency. It's calculated as:
Market Cap = Current Price × Circulating Supply
For Bitcoin at $100,000 with 19.5M BTC in circulation: Market Cap = $100,000 × 19,500,000 = $1.95 Trillion
Types of Market Cap
Circulating Market Cap
Based on coins currently available in the market. Most commonly used metric.
Fully Diluted Market Cap (FDV)
Based on maximum possible supply. Shows potential future dilution.
Example: Token at $10, 1M circulating, 100M max supply
- Circulating MC: $10M
- FDV: $1B
Market Cap Categories
| Category | Market Cap Range | Examples |
|---|---|---|
| Large Cap | $10B+ | BTC, ETH |
| Mid Cap | $1B - $10B | LINK, UNI |
| Small Cap | $100M - $1B | Many altcoins |
| Micro Cap | Under $100M | High risk tokens |
Why It Matters
- Size Comparison: Compare relative size of different cryptos
- Growth Potential: Smaller caps have more room to grow (and fall)
- Liquidity Indicator: Larger caps typically more liquid
- Risk Assessment: Smaller caps are generally more volatile
Limitations
- Doesn't account for locked or lost tokens
- Can be manipulated with low liquidity
- Price ≠ Value (a $1 token isn't "cheaper" than a $50,000 token)