In short, it refers to the total dollar market value of a company’s outstanding shares. Commonly referred to as “market cap,” it is calculated by multiplying a company’s shares outstanding by the current market price of one share.
this is the important keyword! which means you shouldn't even be using market capitalization for a cryptocurrency specially when it comes to altcoins that have unaccounted for supplies. for instance all those premined altcoins that have billions of coins out.
that is why market cap is misleading and even useless in most cases when it comes to cryptocurrencies. in a company your shares mean something and you can't create fake ones not in circulation but in cryptocurrency world you can have literary any number of coins as your supply that you want. and market cap of a coin is simply supply * price.
(1) I don't think that market cap is totally useless in the cryptocurrency market, yes the definition of market cap is usually linked to stocks of a company but other industries can use it as well such as the cryptocurrency market. (2) Mostly just by knowing all the market cap of cryptocurrencies you will know who are the top movers in the market and just by knowing that will mean a lot to traders as they will basically know where the money is at play. Yes if you are looking for those "
hidden gems" you won't be able to use market cap as a tool but if you want to know where you can trade or make some bull run plays, (3) market cap is the first things you need to look at in trading.
in a sense you are right but for the wrong reasons.
(1) this could have only been true if all the altcoins had the same amount of supply OR if their supplies were real and accounted for. but when in reality any altcoin/token can create billions of coins out of thin air and only a small number of coins be in circulation for real then the result of that formula becomes fake.
(2) in a sense this is right because these days people think having a high market cap means it is a good coin so they invest in it. that doesn't make them "top mover" though. in altcoin market it actually is the opposite. meaning the small coins move bigger not the big coins. for example a coin worth 0.1 can not be pumped 10x to 1
BTC but a coin worth 0.00000100
BTC can easily be pumped 10x to 0.00001000
BTC(3) i disagree with this. market cap should be the last thing you look at, if at all. you need to see what you are buying, look at the volume, the price, most important of all the charts. and as i said above there are cons getting pumped 10x easily while you are busying yourself with big bloated market caps.
