Market capitalization

We have often heard that the market capitalization of this cryptocurrency or the global market cap has fallen or gone up in the crypto market. The term market capitalization or market cap refers to the total/overall market value of a cryptocurrency. Market cap can be calculated by multiplying the number of coins in circulation with the existing market price of a single coin at any given time.

For example, if Cryptocurrency X has 400,000 coins in circulation and the price of each coin is $1, then its market cap is $400,000.

The definition of market capitalization somewhat varies when it comes to stocks. In the stock market, the market capitalization of a company is the total market value of all its outstanding shares. This is calculated by multiplying the number of outstanding shares with the current market value of a single share at any particular time.

Market capitalization often helps investors gauge how stable an asset is, still this is not the only criterion as the crypto market is very volatile. Still, it is believed that a big ship can easily navigate unfavourable weather conditions, thus, a cryptocurrency with a larger market cap is seen as a much more stable investment compared to those cryptocurrencies which have a smaller market cap.

Noticeably, digital currencies with small market caps are more vulnerable to the whims of the market, as a result, they can end up making huge gains or dramatic losses depending upon market conditions.

Classification of cryptocurrencies based on their market capitalization:

Cryptocurrencies are classified into three different categories. These include:

Large-cap Cryptocurrencies – Includes those cryptocurrencies having a market cap of more than $10 billion. Examples can be Bitcoin and Ethereum.
Mid-cap cryptocurrencies – Those cryptocurrencies that have a market capitalization in the range of $1 billion and $10 billion.
Low cap cryptocurrencies – Low cap cryptocurrencies have a market capitalization of less than $1 billion. They are considered as most susceptible to risks.

Trending

Gold Bitcoin coins flying outward, symbolizing growth in global BTC treasuries

Bitcoin Treasuries Add Nearly $1B BTC This Week as Holdings Cross 1M BTC

Peter Schiff criticizes Bitcoin, highlighting gold’s strength as a safer asset.

Peter Schiff Criticizes Bitcoin’s Performance Following Gold’s Rally To New ATH

Arkham reveals $5B in dormant Bitcoin tied to Germany’s Movie2K case, untouched since 2019

Arkham Uncovers $5 Billion in Untouched Bitcoin From Germany’s Movie2K Seizure

About author
Disclaimer

CoinGape comprises an experienced team of native content writers and editors working round the clock to cover news globally and present news as a fact rather than an opinion. CoinGape writers and reporters contributed to this article.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

Share on

Follow on Twitter

Share on

Follow on Twitter