Glossary
Market capitalization
Market capitalization (market cap) is the total market value of a cryptocurrency’s circulating supply: the current price multiplied by the number of coins or tokens in circulation. It is used to compare the size of crypto assets.
Also called Market cap, Market capitalisation, Circulating market cap, Mcap
See also
Market capitalization, or market cap, is the total value of all the coins of a cryptocurrency that are currently in circulation. It is the most common way to rank crypto assets by size: when a site lists “the top 10 cryptocurrencies”, it usually sorts them by market cap, not by price.
How market cap is calculated
The formula is simple:
Market cap = current price × circulating supply
The circulating supply is the number of coins that are available on the market, excluding tokens that are locked, unissued or burned. Data providers estimate it from the blockchain and from the project’s disclosures, so two sites can show slightly different figures. Because the price changes every second, market cap is live data; on Coindaro it is displayed from market feeds, not written in articles.
Assets are often grouped by size: large caps, mid caps and small caps. There are no official thresholds, but the larger the market cap, the more money it takes to move the price.
A simple example
Coin A trades at $0.50 with 2 billion coins in circulation: its market cap is $1 billion. Coin B trades at $500 with 1 million coins in circulation: its market cap is $500 million. Coin A is “cheaper” per unit, but the project is twice as big. A low unit price says nothing about whether a coin is undervalued. For coin A to reach $50, its market cap would have to reach $100 billion.
Why it matters
Market cap gives a quick sense of scale and of relative weight in the market, for instance Bitcoin’s share of the total crypto market, known as dominance. It helps compare a small altcoin with an established asset and estimate how realistic a price target is. Combined with trading volume, it also hints at liquidity.
Risks and limits
- Market cap is not money invested. If everyone tried to sell, the price would fall long before reaching that value.
- It ignores tokens still to come. A token with a small circulating supply and big future token unlocks can look cheap; compare it with its fully diluted valuation.
- With thin trading, a few trades can inflate the price, and therefore the market cap, artificially.
- Supply figures may be wrong or include lost coins that will never move again.