General

The Concept of Market Cap & Why It’s Important

Bitcoin is the biggest cryptocurrency today not because it is the first created/launched crypto asset but for factors which include its market cap.

Market cap, which is the short form of market capitalization is a parameter for checking the market value of an asset, stock, etc. In the crypto industry, the market cap helps to know the value and how big a crypto asset is.

CoinMarketCap is one of the world’s most trusted & accurate crypto data authorities which lists cryptocurrencies according to their ranks. These digital assets are listed using their market cap.

So if you wondering what market cap is and what its importance is, we’ll get to understand it in this post.

What is Crypto Market Cap?

Crypto Market Cap is a simple, straightforward way of finding out how big a digital currency is. It can be described as the total dollar value of all the crypto coins mined.

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As of writing, the market cap of bitcoin, the number one cryptocurrency according to CoinMarketCap is $381,455,850,016. Ethereum follows closely with a market cap of $202,459,688,075. The Helium Network is ranked 78th and has a market capitalization of $468,305,143. This shows that the value of the crypto assets drops as you go down the ranking table.

Understanding Crypto Market Cap

In crypto, the market cap is calculated by multiplying the total number of coins in circulation or mined by the price of a single coin at any given time.

For example, if the price of a crypto asset is currently $100 and it has $15 million coins in circulation. The market cap is the result of multiplying both figures which is $1.5 billion in this case.

It is important to know that the market cap of cryptocurrencies is not stable. Even the biggest cryptocurrency, bitcoin is not safe from price volatility. So cryptocurrencies’ market cap can swing dramatically due to their volatility.

It is important to note that the ”circulating supply” market cap is different from the ”maximum supply” market cap. For example, the circulating supply for BTC today is 19,142,950 BTC while its fully diluted supply is its total of 21 million that can be mined.

Categories of Crypto Market Cap

There are over 20, 000 according to data by CoinMarketCap. These crypto assets are ranked according to their market cap. Cryptocurrencies are therefore classified by their market cap into three categories:

1. Large-cap Cryptocurrencies

These are cryptocurrencies that have more than $10 billion. These include Bitcoin, Ethereum, Binance Coin, USDT, etc.

Their investment risk is lower when compared to other cryptocurrencies. This is because they have a demonstrated track record of growth and often have higher liquidity.

2. Mid-cap Cryptocurrencies

These are cryptocurrencies that fall market caps between $1 billion and $10 billion. Examples today are Polkadot ($8.5 billion), Polygon ($7 billion), Litecoin ($4 billion), etc. They generally are considered to have more untapped potential upside but also higher risk.

3. Small-cap Cryptocurrencies

Also known as small-cap altcoins, these are cryptocurrencies that have a market cap of less than $1 billion. Examples today include KuCoin token ($922 million), Dash ($515 million), Celsius ($12 million), and so on.

Small-cap altcoins are most susceptible to dramatic swings based on market sentiment.

Why is Market Cap Important?

The market cap is very important for investors and beginners in the crypto industry. Knowing market cap can help to make more informed investment decisions.

Crypto market caps can give a fact-based look at how altcoins are performing. This will help to make the best decision when diversifying the portfolio.

As a key statistic, it can also tell whether it is safe to buy, compared to others. Large-cap cryptocurrencies are with a lower risk, which made them better options for investment.

Top 10 Cryptocurrencies Based on Market Cap

1. Bitcoin

Bitcoin is ranked the number one crypto asset based on market cap. It has a total market cap of $381,742,124,591. The price is $381,742,124,591 with a circulating supply of 19,142,950 BTC coins.

2. Ethereum

Ethereum has a market cap of $204,028,755,334 as of writing. ETH is selling currently at $1,668 with a circulating supply of 122,261,018 ETH coins.

3. Tether

Tether is the number three ranked crypto today based on market cap. Tether has a total market cap of $67,546,040,664. USDT’s price is always $1 and the circulating supply is 67,545,704,104 USDT tokens.

4. USD Coin

USDC is ranked 4th cryptocurrency among thousands of other cryptocurrencies by CoinMarketCap. It has a total market cap of $51,803,697,952. As a stablecoin, the price of USDC is always tagged to the US dollar at $1. It has a 51,795,649,698 USDC coins.

5. Binance Coin

BNB has a total market capitalization of $45,292,418,614. The price today is$281.21 with a circulating supply of 161,337,261 BNB coins.

6. Binance USD

This is another top-ranked stablecoin in the biggest crypto asset list based on market cap. It has a market cap of $19,470,870,407. The price is $1 with a circulating supply of 19,467,709,709 BUSD coins.

7. Cardano

ADA is the 7th most ranked cryptocurrency based on market cap. It has a market cap of $16,985,123,565. ADA is currently selling at $0.4971. It has a circulating supply of 34,182,044,153 ADA tokens.

8. XRP

XRP is the 8th ranked cryptocurrency based on market cap. It has a total market cap of $16,529,243,953. XRP has a live price of $0. 3323 with a circulating supply of 49,646,492,379 XRP tokens.

9. Solana

Solana is another top crypto in the list of the biggest cryptocurrencies based on market capitalization. SOL has a total market cap of $11,421,942,657. It has a current price of $32.59 with a circulating supply of 349,838,455 SOL coins.

10. Polkadot

Polkadot completes the list of the top-ranked cryptocurrencies today based on market cap. According to CoinMarketCap, DOT has a market capitalization of $8,369,257,880. DOT is selling at $7.50 with a circulating supply of 1,113,984,015 DOT coins.

Conclusion

Market cap is a useful metric for comparing the total value of cryptocurrencies. It is important when making decisions on crypto investment.

Making research on the market capitalization of crypto is one of the important steps to take when buying or investing in cryptocurrencies.

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