Understanding market cap .

[I_Anime]

Many newbies (not just newbies) mostly neglect market caps and focus more on market prices , not knowing market cap is what really matters . First market cap (also know as market capitalization) is the total value of all coins of a cryptocurrency that are currently in circulation.

It’s calculated as:

Market capitalization = price per coin X Circulating supply .

Which means when a coin with 10m supply , and the price is $2 the market cap , will then be market cap = 10,000000 X 2 = 20m MC (market cap)

Why it matters:

• It helps one compare different cryptocurrencies fairly (knowing which is better)
• It helps to understand how big or established a project is .
• It helps estimate risk and volatility

Common crypto market cap tiers :

• large-cap : $10B = Bitcoin, Ethereum (more stable , still volatile) .

• Mid-Cap : $1B-$10B => Growing projects with higher risk /reward

• Small-cap: $100M–$1B=> High risk, high potential

• Micro-cap: Under $100M=> Very risky, often speculative

Market capitalization will show the value of particular projects, and that’s why you make your research throughly when looking project to invest on especially those that are into shitcoins. And same knowledge can also be apply when come to stock too, but this time to calculate the MC is going to be the total supply multiplying the numbers of stocks.

[Floczy]

• It helps one compare different cryptocurrencies fairly (knowing which is better)
• It helps to understand how big or established a project is .
• It helps estimate risk and volatility

Let us also be guided so we don't make mistake. It is true market cap matters a lot, in this case it helps in comparing the quantity of cryptocurrency not, the quality. Because a project has a large market cap does not mean the project is to be trusted, has good tokenomics, and vision. We cant use it to judge which crypto is better. It only compares liquidity, adoption and visibility, which is vital too to know.

It is also good to know that some projects manipulate their market cap. Using airdrops and bounties to inflate the circulating supply and tamper the prices with low liquidity. We need to bare in mind that large market cap cryptos can also crash. A typical example is the "Luna coin" that crash still hunts me till today.

[Charles-Tim]

Common crypto market cap tiers :

• large-cap : $10B = Bitcoin, Ethereum (more stable , still volatile) .

Bitcoin and ethereum are not in this category because ethereum marketcap right now is around $361 billion. Even coins like binance coin, ripple and solana are above $10 billion marketcap.

Bitcoin which is the first among them has a marketcap of $1.7 trillion.

So including bitcoin in the $10 billion category is not acceptable because bitcoin is more than 100x higher than that.

[CryptSafe]

Common crypto market cap tiers :

• large-cap : $10B = Bitcoin, Ethereum (more stable , still volatile) .

Bitcoin and ethereum are not in this category because ethereum marketcap right now is around $361 billion. Even coins like binance coin, ripple and solana are above $10 billion marketcap.

Bitcoin which is the first among them has a marketcap of $1.7 trillion.

So including bitcoin in the $10 billion category is not acceptable because bitcoin is more than 100x higher than that.

Possibly OP wanted to put $10billion above and forgot to complete the statement, or something might have distracted OP, and likely he skipped it because when I first saw it, I began to have the same thought too, if OP really looked at the market capitalization as he is presenting it here. After all, Eth and Bitcoin are far bigger than the categories OP put them in, and I realised it could be some typo or it being skipped and the write-up not completed.

[Curious T]

It is also important that you know that market cap is not everything. Actually, in the grand scheme of things, market cap is not as important as you make it out to be. When a coin has a very large circulatory supply, there is a high chance it will have a high market cap. This can make a coin that is superior in value to another coin have less market cap. For example, XMR has a market cap of 9.4 billion dollars while DOGE has a marketcap of over 21 billion dollars. This does not mean DOGE is a superior coin to XMR.

This is simply because XMR has a circulating supply of about 18 million, while DOGE has a supply of 168 billion, so even though the price of DOGE is only 0.126 dollars, it still has a higher market cap than a coin worth over 500 dollars.