What Is Market cap In Cryptocurrency?
Last Updated on January 20, 2021 by Ephraim Iyodo
What is market cap in Cryptocurrency?
I guess you have also wondered just like many other scholars. In this article, we will explain all you need to know about the market cap in Cryptocurrency.
Cryptocurrency market cap is a simple and understandable way to find out how much a digital currency it is, and it can help you make smarter investment decisions.
The Cryptocurrency Market Cap
Calculating the crypto market is easy. All you have to do is multiply the current coin price by the total number of coins in circulation.
Let’s imagine that Altcoin is currently worth $ 0.228233 and has a circulating supply of 2 million.
Multiplying those two figures tells us what the crypto market cap is – in this case, $ 456,466
Also, these multiplications are easy to do in theory, but things are much more complicated with different types of coin issuance, etc. – for example, crypto-twitter exploded in August 2020 when people realized they couldn’t count the same total ethereum supply twice.
Total Market Cap
Total Market Cap takes in market data from a number of cryptocurrencies – including Bitcoin, Ethereum, XRP and EOS – to provide a more complete, real-time picture of how the crypto sector is performing.
Here at CoinMarketCap, we do all the hard work for you and also offer detailed information on trading volumes over a 24-hour period.
Another important metric to keep an eye on, especially when dealing with altcoins, is total supply volume.
Cryptocurrencies such as Bitcoin have limits on their circulating supply, which means that no more than 21 million coins will ever exist. Others have many more coins (here’s a look at you XRP, with a supply of 1 billion).
Coins with a large total supply tend to cost a lot less. In addition to the cost of their blockchain technology, scarcity tends to drive the value of cryptocurrencies. For example, BTC has a record $20,000, while Ripple’s record is only $3.84.
When evaluating the vast number of cryptocurrencies, one should rely on their market capitalization rather than the price of each coin.
It can be tempting to think that Bitcoin Cash is better than XRP because each coin is worth hundreds of times more. But in fact, BCH has a crypto-market cap that is a third less.
Circulating supply – which takes into account the number of coins available to the general public – is not the only method for calculating the crypto market cap. Alternatives include calculating total supply (factoring in assets that can be locked or reserved).
The other is maximum supply. Here, the market capitalization is calculated by multiplying the altcoin price by the maximum number of coins that can ever exist. (This can be difficult to do. Not only is a higher circulating supply likely to affect the price of cryptocurrencies, but some altcoins have no upper limit).