What is Crypto Market Cap and How To Calculate It? – Phemex Academy

What is Crypto Market Cap and How To Calculate It?

Summary

  • Market capitalization (or market cap) refers to the total value of all a company’s shares of stock.
  • In crypto, market cap is used to understand the value of an asset and its growth from a broader perspective.
  • The total crypto market cap is a measure that depicts the value of the entire crypto industry. The value is derived by adding together the market cap of all cryptocurrencies.

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If you ’ ve ever invested in stocks or common funds, you ’ ll know the importance of the condition market capitalization. Market capitalization ( or market hood ) refers to the total measure of all a company ’ s shares of stock. It is calculated by multiplying the price of a stock by its sum issue of great shares. For example, a company with 20 million shares selling at $ 50 a share would have a market cap of $ 1 billion .
This concept besides applies to the crypto space because knowing the market cap of individual assets and the crypto sector as a hale can be an important factor towards better understanding the focus of the market .

Why should you care about Market Capitalization?

market hood measures what a company is worth on the unfold market and the market ’ s percept of its future prospects. frankincense, grocery store capitalization is a simple, yet effective quantify of how valuable a particular ship’s company or an industry is. It maps the current growth trajectory of a party and besides helps predict its future naturally. As a whole, market crown is a measurement that can help people make knowing investment decisions.

In crypto, market cap is used to understand the prize of an asset and its increase from a broader perspective. however, this is disjoined from the “ total crypto market cap, ” which can help shed light on where crypto stands in comparison to other sectors of the economy .

How to calculate market cap of a Crypto Asset?

For individual cryptocurrencies, the marketplace crown is the total value of all the coins or tokens that have been mined. It is relatively elementary to calculate this number, which is derived by multiplying the price of a single mint with its total mobilize provision. Let ’ s calculate the market cap of Bitcoin (BTC) to better understand this concept .

Market Cap = the price of individual coin x total circulating supply

As of April 2021, the price of an individual Bitcoin is $ 55,165. The sum circle provision is 18,686,162 BTC. In order to get the marketplace cap of Bitcoin, we need to multiply these two values .
frankincense, Bitcoin ’ sulfur Market Cap = $ 55,165 x 18,686,162 = $ 1,030,837,521,611. consequently, the total market ceiling of Bitcoin is $ 1.03T. We can apply the same concept to the other crypto assets deoxyadenosine monophosphate well .

How to calculate a Fully Diluted Market Cap

Diluted market capital is a meter that gives us an idea about the future emergence of the network, and is calculated by multiplying the current value of an individual mint with the entire intended provide.

Diluted Market Cap =
current price of an individual coin x total intended supply

For case, Bitcoin has a soap provision of 21 million, but there are presently 18.6 million BTC in circulation. This means in the future, all 21 million coins will finally be in circulation. so when we multiply this with the current price of 1 BTC, we get a Bitcoin Fully Diluted Market Cap = $ 55,165 x 21,000,000 = $ 1,158,476,473,502. frankincense, the in full diluted commercialize ceiling is approximately $ 1.1T .

Crypto Asset Classification By Market Cap

Based on their commercialize cap, crypto assets are classified into three major categories .

  1. Large-cap cryptocurrencies: Cryptocurrencies that have a market cap greater than $10B are considered to be large-cap cryptocurrencies. Coins like Bitcoin (BTC) and Ether (ETH) make this list. Large-cap cryptocurrencies have seen substantial growth over the years and are considered to be low-risk investment options.
  2. Mid-cap cryptocurrencies: Cryptocurrencies that have a market cap between $1B and $10B are considered to be mid-cap cryptocurrencies. These cryptocurrencies have the potential to see enormous growth in the future.
  3. Small-cap cryptocurrencies: Cryptocurrencies that have a market cap of less than $1B are considered to be small-cap. They are considered to be risky investment options but could also see enormous gains.

What is The Total Crypto Market Capitalization?

The entire crypto market cap is a measure that depicts the value of the entire crypto diligence. The respect is derived by adding together the market cap of all cryptocurrencies, including Bitcoin, altcoins, stablecoins, and tokens. This is a very important system of measurement as it shows the potential growth of the stallion crypto industry. however, because cryptocurrencies are highly fickle the sum crypto market cap can change drastically from time to time.

In April 2021, this value surpassed $ 2T, marking an significant milestone in the history of crypto. however, with a market crown of $ 1.03T, Bitcoin occupies more than 50 % of the entire crypto market cap. This is called “ Bitcoin Dominance. ”
apart from this, the five other major coins, Ether ( ETH ), Polkadot (DOT), Tether (USDT), and Cardano (ADA) account for $ 422B or up to 20.5 % of the sum measure. The remaining 28 % of the market is occupied by other smaller coins .

Final Thoughts

While there are some investors who swear by a market detonator, there are inactive some who believe that market hood does not provide an accurate calculate of a crypto asset ’ s prize. however, it is an crucial metric function to analyze while keeping a close eye on other metrics as well .

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Category : Finance

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