market capitalization is a wrong factor to be used for cryptocurrencies. it is used for stocks and to show the value of a company and it is wrong to use it for cryptos!
the way it is calculated is to multiply supply and price so when price goes up, market cap goes up with it. and the same way as the supply goes up or is already huge the market cap is also going up with it.
I know what you try to say, when price of some random coin goes up, for example because of pump&dump group or some announcement, this doesn't mean that value of that cryptocurrency is current high price multiplied by circulating supply, because only a fraction of all coins were bought at that highest price but most people are not prepared to pay the same price so it's wrong to valuate the entire cryptocurrency at the same price.
I partly agree with this, but I don't understand why you think that this is ok for valuating company, while it is not for cryptocurrency. I think it's very similar. Successful companies like Apple or Tesla also have "overpriced" stock price because people believe in those companies and their future potential, demand for stocks is big and price goes up. The value of company is calculated based on current price of one stock, again, multiplied by number of stocks. Which is not realistic if you ask me. Ok, company has some physical property like real estate and machinery, but the value of company is few times more than value of that property alone.
Also companies create new stocks sometimes, just like circulating supply of cryptos is slowly growing.
My conclusion would be that market cap could be misleading indicator sometimes (especially during rapid growth - pump&dump) but when price of one cryptocurrency is relatively stable, market cap is about as important information about crypto value, as it is relevant for company value.