What Is Market Cap and Why It Matters
When you open a list of cryptocurrencies, it is usually ranked by market cap. It is one of the most useful numbers in the market, and one of the most misunderstood.
The formula
Market cap = current price × circulating supply.
If a coin costs 2 and there are 500 million coins in circulation, its market cap is 1 billion.
Why price alone is misleading
A coin priced at 0.01 is not necessarily cheap, and a coin priced at 50,000 is not necessarily expensive. What matters is the price combined with how many coins exist. Two coins with the same price can have very different market caps.
Circulating, total and maximum supply
- Circulating supply: coins currently available.
- Total supply: coins created so far, including locked ones.
- Max supply: the most that will ever exist, if the project has a cap.
Fully diluted valuation (FDV) uses the maximum supply and shows what the market cap would be if every coin were already in circulation.
Large, mid and small caps
Large caps are usually more liquid and a bit less volatile. Small caps can move much faster in both directions, and they are easier to manipulate.
What it does not tell you
Market cap does not measure how good a project is, how secure it is or how much real money is invested in it. Always look at volume, supply and the project itself.
You can sort every coin on our Markets page by market cap, price or volume.
This article is for information only and is not financial advice.
