What is market capitalisation in crypto?
Price alone does not tell you how big a cryptocurrency is. For that, traders look at market capitalisation, or market cap.
The formula
Market cap = price × circulating supply
A coin priced at 1 USDT with 10 billion coins in circulation has a market cap of 10 billion. A coin priced at 1,000 USDT with 1 million coins has a market cap of 1 billion, ten times smaller.
Why a low price is not "cheap"
Many new traders think a coin at 0.001 can easily reach 1. But if it has hundreds of billions of coins in circulation, reaching 1 would require a market cap bigger than the largest companies in the world. Always check supply.
Circulating, total and maximum supply
- Circulating: coins available on the market now.
- Total: coins created so far, including locked ones.
- Maximum: the most that will ever exist (21 million for Bitcoin; some coins have no maximum).
Locked coins that unlock later can add selling pressure.
Size and risk
Large-cap coins like BTC and ETH tend to move less sharply than small-cap coins, which can rise fast and fall even faster.
Compare coins by market cap and volume on the Velxen markets page and on each coin page, such as BTC.
This article is for education only and is not financial advice. Crypto prices can rise and fall sharply; only trade with money you can afford to lose.
