The cryptocurrency market capitalization also known as cryptocurrency market cap is the overall measure of growth in the cryptocurrency market.
The term market capitalization refers to the market value of a company, market or sector at a particular time which can be regarded as the relative size of the company, market or sector.
Cryptocurrency market capitalization refers to the metric that measures the relative size of the cryptocurrency market.
It is calculated by multiplying the current market price of cryptocurrencies with the total volume of cryptocurrencies in circulation.
Relevance of cryptocurrency market cap
Stability
The market cap of a cryptocurrency can be used as a metric for measuring its stability.
Crypto market is volatile but the volatility differs from one coin to another.
A $1million selling pressure will have a different impact on a coin with $1billion market cap and a coin with $10million market cap.
In the first coin, $1million represents 0.1% while the same $1million represents 10% of the total value of the second coin.
Popularity
Another random use of market cap is popularity.
Based on comparison, the crypto market cap can be used to denote how popular the coin is.
Bitcoin and ethereum have maintained the first and second position respectively and by no chance they are the most popular cryptocurrency.
Market indicator
Another relevance of market cap is to serve as an indicator of a potential change in trend.
During a bullish market, cryptocurrency other than stablecoin seems to have a higher market cap.
This is because more traders are converting stablecoin to other crypto assets thereby increasing its value.
On the other hand, during a bearish market crypto traders tend to convert their crypto assets to stablecoins with the aim of buying back at a lower price.
This moves more funds to stablecoin by giving them more value and competing with other top crypto assets in market cap.
Fully diluted market cap
The term fully diluted market cap is also expressed just like market cap but with a difference.
Cryptocurrency market capitalization uses circulating supply which refers to the amount of cryptocurrency that is currently available in the global market multiplied by the current price of the cryptocurrency.
Fully diluted market cap is the maximum supply of the cryptocurrency multiplied by the current price of such cryptocurrency.
It indicates the value of a cryptocurrency if all the future coins are mined as at today’s price.
Nevertheless, the fully diluted market cap and market cap of any cryptocurrency without maximum supply is the same.
Do you miss any of these?
Basics of blockchain technology
History of blockchain technology
Introduction to cryptocurrency
Different types of cryptocurrency.
Types of cryptocurrency wallets
Central Bank Digital Currency (CBDC)
About Kumo
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[…] Cryptocurrency market capitalization refers to the metric that measures the relative size of the cryptocurrency market. […]