What is cryptocurrency market cap? Market Cap is a shortened term for Market Capitalization. Cryptocurrency market capitalization is a technique to know the value of cryptocurrency. The formula to calculate the coin’s market cap is multiplying the total circulating supply of the coin by its price stick to the post to learn more about it.
What is cryptocurrency market cap? Example
If we published an XYZ coin and there are 200,000 of them worth $4 each the block XYZ coin would have a market cap of $800,000 but now we’re bored of this coin and we release block XYZ.
There are only 60,000 of these coins but they’re worth $3 each for a total market cap of $180,000 therefore even though block XYZ coin two is worth twice as much as the original XYZ coin. Its market cap is lower than the market cap is a better way to check the growth and hype of a coin than price alone.
If I have 1-coin worth 2M dollars that doesn’t make any sense in terms of growth. It has much utility as a currency but a large community trading and interacting with 600 million coins worth one cent each has the groundwork for something special. Even if I have 1M dollars’ worth of coins worth more individually the network of the lower-priced coin is more valuable one of the key takeaways
Cryptocurrency Risk vs Reward
Most times you invest in small-cap assets and gain more but you also tend to lose more. That’s why you have to learn the concept of diversification comes from a share of the money that can be placed into larger caps and fewer volatile assets.
While you can put money in small-cap volatile assets only the share of risker money on which if you face any loss you won’t regret it. It allows for the possibility to gain from some of the massive growth in it that small market cap coin can be a risk while saving a portion of your investment.
In the less volatile large-cap assets but the market cap doesn’t quite tell the story even if it can be Illustrated one big problem with market cap and cryptocurrency are that many coins can be locked completely out of use entirely.
Related: What is cryptocurrency?
We can look at a real-world example of this in real numbers. Suppose 1 cryptocurrency Bitcoin according to the theory that the bitcoin inventor Satoshi Nakamoto’s stake of 17 to 23 percent of bitcoins may already be lost forever because he is dead.
Bitcoin has a maximum supply of 21M coins and it has a circulating supply of around 18.925M it takes 10 minutes to update its block.
Related: World’s top 10 cryptocurrency
When in reality much of that cap is locked away or lost forever that’s why it’s very important to do your own research before investing and to never invest on raw numbers presented to you. Must check and research it. what market cap is how it can be useful and how it can be a misleading finding to ignore.
Well-researched sourced and reliable information is the most important factor in deciding what to do with your money. Always make the most informed decision possible for yourself.
If you want to know about your coin market cap and supply you should use Coinmarketcap it will help you to get a deep analysis of any coin and also provides authentic details.
If you have any questions about what is cryptocurrency market cap? feel free to ask in the comment box.