Crypto market capitalization is one of the things you will need to know if you’ll be investing in cryptocurrencies. Crypto assets all have a market cap and are categorized according to their value.
The market cap of cryptocurrencies is not stable due to its volatile nature. CoinMarketCap is the number one trusted and accurate crypto data authority. It has a list of cryptocurrencies rankings based on their market capitalization.
In this post, we’ll learn about market cap and how it works. Before then, let’s see what cryptocurrency is all about especially for beginners.
What is Cryptocurrency?
Cryptocurrency is a digitally encrypted, decentralized currency that is not linked to or regulated by any government or central bank.
It is based on blockchain technology, which is a distributed ledger framework. Blockchain is a distributed ledger that is managed by a network of computers. It maintains an exact copy of the database and updates its records by consensus based on pure mathematics.
Bitcoin is the first cryptocurrency created which has led to the creation of others alike known as altcoins.
Cryptos are categorized as virtual or digital currencies. They were originally developed to provide an alternative mode of payment for online transactions.
Today, there are over twenty thousand crypto-assets according to CoinMarketCap.
What is Crypto Market Capitalization?
Crypto Market Cap is a simple, straightforward way of finding out how big a digital currency is. It can be described as the total dollar value of all the crypto coins mined.
It is important to note that the ”circulating supply” market cap is different from the ”maximum supply” market cap. For example, the circulating supply for BTC today is 19,142,950 BTC while its fully diluted supply is its total of 21 million that can be mined.
The market cap is very important for investors and beginners in the crypto industry. Knowing market cap can help to make more informed investment decisions.
Crypto market caps can give a fact-based look at how altcoins are performing. This will help to make the best decision when diversifying the portfolio.
Understanding Cryptocurrency Market Capitalization
In crypto, the market cap is calculated by multiplying the total number of coins in circulation or mined by the price of a single coin at any given time.
For example, if the price of a crypto asset is currently $100 and it has $15 million coins in circulation. The market cap is the result of multiplying both figures which is $1.5 billion in this case.
It is important to know that the market cap of cryptocurrencies is not stable. Even the biggest cryptocurrency, bitcoin is not safe from price volatility. So cryptocurrencies’ market cap can swing dramatically due to their volatility.
Categories of Cryptocurrencies Based on Market Capitalization
1. Large-cap Cryptocurrencies
These are cryptocurrencies that have more than $10 billion. These include Bitcoin, Ethereum, Binance Coin, USDT, etc.
Their investment risk is lower when compared to other cryptocurrencies. This is because they have a demonstrated track record of growth and often have higher liquidity.
2. Mid-cap Cryptocurrencies
These are cryptocurrencies that fall market caps between $1 billion and $10 billion. Examples today are Polkadot ($8.5 billion), Polygon ($7 billion), Litecoin ($4 billion), etc. They generally are considered to have more untapped potential upside but also higher risk.
3. Small-cap Cryptocurrencies
Also known as small-cap altcoins, these are cryptocurrencies that have a market cap of less than $1 billion. Examples today include KuCoin token ($922 million), Dash ($515 million), Celsius ($12 million), and so on.
Small-cap cryptos are most susceptible to dramatic swings based on market sentiment.
Top 10 Cryptocurrencies Today Based on Market Capitalization
Here is a list of the top-ranked crypto assets and their market cap as of writing. The list is compiled using CoinMarketCap’s ranking.
1. Bitcoin ($381,742,124,591)
2. Ethereum ($204,028,755,334)
3. Tether ($67,546,040,664)
4. USD Coin ($51,803,697,952)
5. Binance Coin ($45,292,418,614)
6. Binance USD ($19,470,870,407)
7. Cardano ($16,985,123,565)
8. XRP ($16,529,243,953)
9. Solana ($11,421,942,65)
10. Polkadot ($8,369,257,880)
Conclusion
Understanding cryptocurrency market capitalization helps investors in making decisions on crypto investment. Market cap is a useful metric for comparing the total value of cryptocurrencies
