A “crypto market cap” indicates the overall market value of any given crypto. Understanding the crypto market cap is essential for crypto investors trying to make well-informed investment decisions.
The crypto market cap indicates the overall market value of a crypto. It is important for crypto investors to understand the crypto market cap so that they can get insights into the crypto’s value.
What is a cryptocurrency market cap?
Traditionally, market cap indicates the total value of shares of a company’s stock. The crypto industry has adopted market capitalization, or “crypto market cap”, as a similar metric to indicate the overall market value of any given crypto.
How to calculate a cryptocurrency market cap
The crypto market cap is calculated by multiplying the price of a coin by the total number of coins in circulation.
For example, in the screenshot below, the price of Bitcoin (BTC) is $57,876.81. The maximum supply of BTC is 21 million coins, and 93.9% of the supply is currently in circulation (approximately 19.73 million BTC coins).
Past performance is not an indication of future results
Source: eToro
Why is the crypto market cap important to investors?
It is important for investors to understand what is meant by the crypto market cap as it allows them to see past the price of a cryptoasset to gain a better, overall insight into its value.
The market cap allows for comparison between coins, enabling investors to compare the relative size and value of one crypto with another. Data from a wide range of cryptos can further indicate the total crypto market cap, as a measure of how the asset class is performing overall.
This can offer investors wider market insight and can help them formulate decisions about whether now is the right time to invest.
Investors should also be aware of how market cap can impact the price of an individual cryptoasset by influencing its perceived value and investor sentiment. A higher market cap can indicate increased stability and demand, signifying investor confidence, and thus driving the price upwards.
Maximum vs circulating supply
Crypto investors should not take market cap metrics at face value. There are several differences between the crypto and traditional financial markets that need to be considered.
In traditional financial markets, “free float” metrics can differentiate between publicly traded shares and those held in “lock up,” perhaps by company founders, directors or executives. This differentiates between the total (or “maximum”) supply and the circulating supply of shares.
Similarly, in the crypto sector, a coin’s maximum supply can differ from a coin’s circulating supply, but the difference between these two metrics is not always made abundantly clear.
Maximum supply refers to the maximum number of crypto coins or tokens that can ever exist. Some cryptoassets, such as Bitcoin, have limits to their maximum supply, meaning that there will always be a predetermined number of coins. Others, such as Ethereum, have an infinite supply.
On the other hand, circulating supply refers to the number of coins that exist in open circulation (free float) at any given time.
These metrics can differ. As well as a potentially significant volume of privately issued or owned coins held in lockup, there are also coins awaiting release in an ICO. Some coins are lost over time, and others may simply remain stagnant in anonymous wallets.
Tip: Investors should understand how various factors can influence the total and circulating supply of a cryptoasset.
Generally, market cap calculations are determined using circulating supply metrics. However, when calculating or considering market cap, it is crucial to be aware of which metrics have been used and to understand the implications that either may have on the outcome.
How are crypto market caps categorized?
Cryptos fall into one of three categories, depending on the value of their market cap: large-cap, medium-cap and small-cap. Each market cap comes with a “risk” level. Large-cap hold the least perceived risk and are generally more established cryptos.
| Large-cap cryptocurrencies | Medium-cap cryptocurrencies | Small-cap cryptocurrencies |
|---|---|---|
| Large-cap cryptocurrencies have a market cap of over $10bn. They are generally considered lower-risk investments, as they have more liquidity and are better able to withstand market volatility. | Mid-cap cryptocurrencies have a market cap of between $1bn and $10bn. They are widely considered to be medium-risk investments because although they are more volatile than large-cap cryptoassets, many investors believe that untapped opportunities lie within coins of this category. | Small-cap cryptocurrencies have a market cap of lower than $1bn, and are deemed to be the riskiest investments. While they have greater upside potential, small-cap coins are most susceptible to market volatility and generally have lower liquidity to withstand sudden, or high-volume, market movements. |
What are the largest crypto market caps?
Investors will likely be familiar with some of the largest market-cap cryptocurrencies. These include Bitcoin, Ethereum and Solana.
- Bitcoin is the largest crypto by market cap. It was the world’s first crypto and has revolutionized decentralized finance. According to eToro data, as of February 2025, it had a market cap of $2,088.86bn.
- Ethereum is the second-most-popular cryptoasset, popularized by the ability to build upon its blockchain and facilitate the use of decentralized applications (dApps). According to eToro data, as of February 2025, it had a market cap of $387.15bn.
- XRP assists with currency exchange and cross-border payments. It allows businesses to send money overseas quickly and affordably. According to eToro data, as of February 2025, it had a market cap of $179.26bn.
- Tether is a crypto that is pegged to the US dollar, at a 1:1 ratio, which reduces its volatility. It is the largest stablecoin by market cap, and fluctuates alongside the movements of the US dollar. The USDT token can be used as transaction currency both on and off blockchains. According to eToro data, as of February 2025, it had a market cap of $139.40.
- Solana is the native token of the Solana blockchain, which can facilitate the creation of dApps. The SOL token itself can be used within the Solana network to pay transaction fees and run smart contracts. According to eToro data, as of February 2025, it had a market cap of $117.38bn.
- Binance Coin is the native crypto associated with the Binance Exchange, which operates through the Binance blockchain. Binance regularly repurchases or “burns” one-fifth of its treasury. As a token, BNB can be used for payments and transaction fees on Binance platforms. According to eToro data, as of February 2025, it had a market cap of $99.06bn.
Final thoughts
The crypto market cap can offer valuable insights for investors and traders into the wider context of many cryptoassets.
It should not be misunderstood as a direct indication of value, but when considered in line with a well-thought-out investment strategy, market cap can help crypto investors to understand more about the perceived value, size and stability of a cryptoasset.
Learn more about investing in crypto by visiting the eToro Academy.
FAQs
- Is market cap alone enough to determine a good investment?
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No, market cap alone should not be used to determine the strength of a coin’s investment potential. It should be used as an insight, alongside consideration of other factors such as use case potentials, ownership and development structure, and the underlying blockchain technology.
- What is meant by the term “Volume %”?
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“Volume %” is usually shown alongside market cap and price data to demonstrate the trading volume of a cryptocurrency within the last 24 hours. The percentage shown will be the percentage change in trading volume, either positive or negative.
- Are coins with large market caps always more stable?
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Generally, coins with larger market caps are considered to be more stable than those with smaller market caps. However, even the price of large-cap coins, such as Bitcoin, can be highly volatile. As with all asset classes, it is sensible to diversify your portfolio across the small-, mid- and large-cap cryptoassets, to help manage your risk.
This information is for educational purposes only and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to, buy or sell any financial instruments.
This material has been prepared without regard to any particular investment objectives or financial situation and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Not all of the financial instruments and services referred to are offered by eToro and any references to past performance of a financial instrument, index, or a packaged investment product are not, and should not be taken as, a reliable indicator of future results.
eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this guide. Make sure you understand the risks involved in trading before committing any capital. Never risk more than you are prepared to lose.