Glossary

The market capitalization of a specific cryptocurrency refers to the total value of its mined coins. It represents its current market value, and showcases its popularity.

The market capitalization (or market cap) of a cryptocurrency is a measurement of its market value. In other words, it’s a measurement of its popularity. It indicates how much capital is currently invested in a cryptocurrency. 

The market cap of a coin is calculated using the following formula: 

Current market price x number of coins in current circulation

Let’s look at the following examples to understand it better:

So, although the price of coin A is considerably higher than the price of coin B, the market cap is actually less. How so? Because the circulating supply of coin B is higher than coin A, so much so that when you multiply it by the current market price, it has a higher market cap. That is why the price of a cryptocurrency is not an indicator by itself of its market value and popularity. 

Cryptocurrencies can be categorized into large-cap, mid-cap, and small-cap. This can give an indication of how safe an investment it is. 

Market Capitalization

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