What Is Market Capitalization?
1. Definition
A. For a cryptocurrency like Bitcoin, market capitalization (or market cap) is the total value of all the coins that have been mined.
B. It’s calculated by multiplying the number of coins in circulation by the current market price of a single coin.
2. How is it measured?
C. Market Cap [USD] = Price[USD] × Circulating Supply [#]
3. What can you do with market cap?
D. Market cap allows you to compare the total value of one cryptocurrency with another so you can make more informed investment decisions.
E. Cryptocurrencies are classified by their market cap into three categories (Large-cap , Mid-cap , Small-cap)
4. Large-cap cryptocurrencies
F. Including Bitcoin and Ethereum, have a market cap of more than $10 billion.
G. Investors consider them to be lower risk investments because they have a demonstrated track-record of growth and often have higher liquidity.
H. They can withstand a higher volume of people cashing out without the price being dramatically impacted.
5. Mid-cap cryptocurrencies
I. Have market caps between $1 billion and $10 billion.
J. They generally are considered to have more untapped potential upside but also higher risk.
6. Small-cap cryptocurrencies
K. Have a market cap of less than $1 billion and are most susceptible to dramatic swings based on market sentiment.
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