Bitcoin0.08%
3727.98 USD
CAP: 65,405,245,263 USD
Ethereum0.32%
137.32 USD
CAP: 14,405,167,762 USD
XRP0.16%
0.31 USD
CAP: 12,742,515,112 USD
CAP: 2,685,432,743 USD
EOS0.23%
2.92 USD
CAP: 2,647,830,865 USD
CAP: 2,291,533,955 USD
Tether0.03%
1.00 USD
CAP: 2,028,274,543 USD
TRON-0.08%
0.02 USD
CAP: 1,604,099,695 USD
CAP: 1,542,781,630 USD
CAP: 1,324,673,777 USD
CAP: 1,103,884,247 USD
Monero-0.19%
48.60 USD
CAP: 816,481,334 USD
IOTA0.36%
0.28 USD
CAP: 779,242,076 USD
Dash0.19%
80.50 USD
CAP: 695,246,111 USD
Maker1.56%
563.06 USD
CAP: 563,055,592 USD
NEO0.32%
8.38 USD
CAP: 544,577,952 USD
CAP: 458,473,010 USD
NEM0.41%
0.04 USD
CAP: 376,972,931 USD
Zcash0.16%
52.38 USD
CAP: 310,054,677 USD
Apr 2, 2018by CryptoCanada

Market capitalization, or market cap for short, is a common term used in reference to cryptocurrency. Although it may sound like a cumbersome concept to wrap one’s head around, it is actually very straight forward. Simply put, market cap is calculated by multiplying the circulating supply of a coin by its value per coin.

To provide further context, let’s briefly go over how Bitcoin’s market cap is calculated. At the time of writing this article, there are 16,952,450 Bitcoins in circulation. This figure is not to be confused with the 21 million total supply of Bitcoin, which is not a figure used when it comes to calculating market cap.

The current market value of Bitcoin would be, at the time of writing this article, approximately $6850. We’d go about calculating market cap as follows:

Circulating Supply (16,952,450) x Value Per Coin ($6850) = Bitcoin Market Cap ($116,124,282,500)

Market Cap – Is it really important?

Overall, market cap should be considered important to investors. Although it has its drawbacks, it provides valuable information when it comes to researching individual coins, comparing two or more coins, and researching cryptocurrency’s performance as a whole.

Supply and Demand Insights

Market cap provides a useful metric for tracking the broad performance of any given cryptocurrency. With both variables behind the calculation of market capitalization changing frequently (price more-so than circulating supply), tracking market cap can provide some insights in regards to the supply and demand of a particular coin.

Determining Relative Value

It is arguably one of the best metrics to use when comparing coins to one another. Cryptocurrencies have a wide variation of circulating supplies and values. Comparing any one of these individual metrics just doesn’t work out, such as comparing the price per coin of Ripple (XRP) to Bitcoin (BTC). Comparing market caps is as good as it gets when it comes to determining relative value.

Determining Market Dominance and “Market Share”

By tracking the entire cryptocurrency market’s capitalization, we’re able to gain insights on important metrics such as Bitcoin dominance and “market share” over time. Bitcoin dominance refers to which percentage of the entire cryptocurrency market cap that is accounted for by Bitcoin. This number changes over time and provides insights in to market sentiment and altcoin performance.

To provide some context, lets examine this chart of total cryptocurrency capitalization. We can see that over the past 2 years, Bitcoin’s dominance (represented by orange in the chart) has fallen from roughly 80% to under 50%. This suggests that altcoins have seen significant growth during these 2 years at a higher rate than Bitcoin’s growth.

Percentage of Total Market Capitalization Chart from CoinMarketCap.com

The other colors in the chart provide context as to how other coins’ market shares fluctuate over time. Again, a very useful metric in terms of sentiment and defining trends.

Drawbacks and Misconceptions in Regards to Market Cap

Market Cap Does NOT Represent the Amount of Capital Invested

It is important to note that market cap does not represent the amount of capital that has been invested in to the markets. Market cap is simply a calculation based on the variables previously discussed, circulating supply multiplied by value per coin. Actual capital invested into the markets is not something that can be calculated in any way, shape, or form using market capitalization, with the possible exception of stablecoins.

Market Cap CAN be Manipulated

Building upon the previous point, it is important to understand how easily market cap can be manipulated. Especially when it comes to cryptocurrencies with a smaller market cap. As market cap isn’t tracking actual value invested, all it takes for market cap to be manipulated is to fabricate the value of a coin. This can be done in many ways which we won’t go into in this article, though it is important to note that in a smaller market with low volume, individual trades will have a higher impact on the price. If two individuals agree to trade with one another in a manner that is going to artificially inflate value per coin, this will also reflect in said coin’s market cap.

Conclusion

Market cap certainly is an important figure number to keep track of and it provides many facets of perspectives when it comes to examining the market. Understanding what market cap represents and implies enables investors to make the most out of the information it supplies. One should also be aware of the drawbacks and misconceptions in regards to market cap so that they are taking these in to account when conducting research/analysis.



Bitfinex
3789.97 usd
Coinbase
3677.99 usd
Bitstamp
3681.60 usd
Kraken
3679.30 usd
itBit
3674.29 usd
Kraken
3253.50 eur
Bitfinex
3351.70 eur
Coinbase
3249.99 eur
Bitstamp
3248.32 eur
Bitsane
3270.93 eur
Kraken
4841.50 cad
LakeBTC
5745.70 cad
LocalBitcoins
4716.76 cad
BitSquare
21998.79 cad
Coinbase
861.74 cad
IndependentReserve
5135.45 aud
BTCMarkets
5159.38 aud
ACX
5140.93 aud
CoinJar
5170.00 aud
Quoine
5248.11 aud
CoinBene
3714.54 usdt
Bibox
3718.91 usdt
BitMart
3714.00 usdt
IDAX
3714.02 usdt
Binance
3719.10 usdt
Bitfinex
140.27 usd
Ethfinex
140.27 usd
Coinbase
135.91 usd
Kraken
135.93 usd
Bitstamp
135.96 usd
Kraken
120.20 eur
Ethfinex
123.70 eur
Bitfinex
123.70 eur
Coinbase
120.16 eur
Bitstamp
120.10 eur
Kraken
177.79 cad
NDAX
157.23 cad
QuadrigaCX
163.29 cad
Remitano
214.73 cad
IndependentReserve
190.49 aud
BTCMarkets
189.91 aud
CoinJar
191.00 aud
Quoine
145.70 aud
ACX
190.99 aud
Binance
137.40 usdt
BitMart
137.12 usdt
IDAX
137.44 usdt
LBank
137.35 usdt
Bibox
137.10 usdt
Bitfinex
0.32 usd
Bitstamp
0.31 usd
Kraken
0.31 usd
Exmo
0.32 usd
BitTrex
0.31 usd
Kraken
0.27 eur
Bitstamp
0.27 eur
Bitsane
0.27 eur
Cexio
0.27 eur
Exmo
0.28 eur
Kraken
0.40 cad
NDAX
0.52 cad
IndependentReserve
0.43 aud
BTCMarkets
0.43 aud
CoinJar
0.43 aud
ACX
0.62 aud
Binance
0.31 usdt
ZBG
0.31 usdt
IDAX
0.31 usdt
OKEX
0.31 usdt
HuobiPro
0.31 usdt
Bitfinex
45.21 usd
Coinbase
43.87 usd
Bitstamp
43.85 usd
Kraken
43.91 usd
Gemini
43.84 usd
Coinbase
38.78 eur
Kraken
38.74 eur
Bitstamp
38.69 eur
Bitsane
38.46 eur
Bitlish
38.83 eur
NDAX
43.75 cad
QuadrigaCX
46.30 cad
IndependentReserve
60.54 aud
BTCMarkets
61.61 aud
ACX
60.93 aud
CoinJar
64.16 aud
ZB
44.36 usdt
HitBTC
44.34 usdt
OKEX
44.33 usdt
IDAX
44.36 usdt
HuobiPro
44.37 usdt
Bitfinex
2.97 usd
Kraken
2.89 usd
Exmo
2.96 usd
Yobit
3.00 usd
LiveCoin
2.88 usd
Bitfinex
2.63 eur
Kraken
2.55 eur
Exmo
2.65 eur
BitFlip
4.62 eur
Nexchange
8.88 eur
NDAX
3.51 cad
ACX
7.59 aud
HitBTC
2.91 usdt
OKEX
2.91 usdt
BitMart
2.91 usdt
BitZ
2.92 usdt
HuobiPro
2.92 usdt
binance