What is market cap in crypto?
Market cap is the quickest way to compare the size of cryptocurrencies. Here is how it is calculated and where it misleads.
Market capitalisation, or market cap, tells you how big a cryptocurrency is. It is the current price of one coin multiplied by the number of coins in circulation.
For example, if a coin costs $2 and there are 100 million coins in circulation, its market cap is $200 million.
Why it matters
Price alone says very little. A coin priced at $0.50 can be far larger than one priced at $500 if it has many more coins in circulation. Market cap puts coins on the same scale, which is why rankings and heatmaps use it. You can see this on our heatmap, where bigger blocks mean bigger market caps.
Size groups
Analysts often split coins into large caps, mid caps and small caps. Larger coins tend to be more liquid and a little less volatile. Small caps can rise or fall much faster.
Where market cap misleads
- It is not money invested. A $1 million purchase of a thinly traded coin can move its price, and its market cap, by far more than $1 million.
- Circulating supply can be unclear. Some coins have large amounts locked or yet to be released. Fully diluted valuation counts all coins that will ever exist, and can look very different.
- Prices differ between exchanges, so figures vary slightly from site to site.
Use market cap as a starting point to compare coins, then look at volume, supply and what the project actually does. See also total value locked for DeFi projects.