Market Cap Formula:
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Market capitalization (market cap) is the total market value of a cryptocurrency's circulating supply. It is calculated by multiplying the current market price of a single unit by the total circulating supply of the cryptocurrency.
The calculator uses the market cap formula:
Where:
Explanation: This simple multiplication gives you the total market value of all circulating coins of a particular cryptocurrency.
Details: Market cap is a crucial metric in cryptocurrency analysis as it helps determine the relative size and dominance of different cryptocurrencies in the market. It provides a more accurate picture of a cryptocurrency's value compared to just looking at the price alone.
Tips: Enter the current price per coin in dollars and the total circulating supply. Both values must be positive numbers to calculate the market capitalization.
Q1: Why is market cap important in crypto?
A: Market cap helps investors understand the relative size and dominance of different cryptocurrencies, providing a better comparison than price alone.
Q2: What's the difference between market cap and fully diluted market cap?
A: Market cap uses circulating supply, while fully diluted market cap uses maximum supply, showing potential future market size.
Q3: How often should market cap be calculated?
A: Market cap should be calculated regularly as both price and circulating supply can change frequently in crypto markets.
Q4: Are there limitations to market cap as a metric?
A: Yes, market cap doesn't account for liquidity, token distribution, or locked tokens, which can affect the actual market dynamics.
Q5: How does market cap affect cryptocurrency rankings?
A: Cryptocurrencies are typically ranked by market cap, with Bitcoin usually having the largest market cap and therefore the top ranking.