What is Market Cap?
Market cap, short for market capitalization, refers to the total value of a cryptocurrency’s circulating supply. It is calculated by multiplying the current price of one unit of the cryptocurrency by the total number of coins or tokens in circulation. Market cap is an essential indicator for evaluating the size, popularity, and market value of a cryptocurrency in relation to others.
In the world of cryptocurrency, market cap helps investors understand the relative importance of different cryptocurrencies. For example, Bitcoin, with a higher market cap, is generally considered more dominant and stable compared to smaller cryptocurrencies.
There are three main types of market caps: large-cap (usually over $10 billion), mid-cap, and small-cap cryptocurrencies. Large-cap cryptocurrencies like Bitcoin and Ethereum are often seen as safer investments, while small-cap cryptocurrencies may have higher volatility but also higher growth potential.