{"id":853317,"date":"2024-02-27T15:20:48","date_gmt":"2024-02-27T13:20:48","guid":{"rendered":"https:\/\/www.etoro.com\/?page_id=853317"},"modified":"2025-11-03T15:15:31","modified_gmt":"2025-11-03T13:15:31","slug":"crypto-market-cap","status":"publish","type":"page","link":"https:\/\/www.etoro.com\/en-us\/crypto\/crypto-market-cap\/","title":{"rendered":"Understanding Crypto Market Caps"},"content":{"rendered":"\n

A \u201ccrypto market cap\u201d 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.<\/p>\n\n\n\n\n\n\n

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The crypto market cap indicates the overall market value of a crypto.<\/strong> It is important for crypto investors to understand the crypto market cap so that they can get insights into the crypto\u2019s value. Analysing crypto market caps can help investors get a better feel for a coin, and its prospects.<\/p>\n\n\n\n

What is a cryptocurrency market cap?<\/h2>\n\n\n\n

Traditionally, market cap indicates the total value of shares<\/a> of a company\u2019s stock. The crypto industry has adopted market capitalization<\/e-tip><\/strong>, or \u201ccrypto market cap\u201d, as a similar metric to indicate the overall market value of any given crypto.<\/p>\n\n\n\n

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How to calculate a cryptocurrency market cap<\/h3>\n\n\n\n

The crypto market cap is calculated by multiplying the price of a coin by the total number of coins in circulation<\/strong>.<\/p>\n\n\n\n

For example, in the screenshot below, the price of Solana (SOL) is $147.9001. The supply of SOL coins currently in circulation is<\/strong> 534.61 million. That equates to the market cap of Solana at this time being approximately $79.07 billion.<\/p>\n\n\n\n

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Past performance is not an indication of future results<\/em><\/p>\n\n\n\n

Source: eToro<\/a><\/p>\n\n\n\n

Why is the crypto market cap important to investors? <\/h2>\n\n\n\n

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<\/a> to gain a better, overall insight into its value<\/strong>. <\/p>\n\n\n\n

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.<\/mark><\/p>\n\n\n\n

This can offer investors wider market insight<\/strong> and can help them formulate decisions about whether now is the right time to invest.<\/p>\n\n\n\n

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<\/e-tip>. A higher market cap can indicate increased stability and demand<\/e-tip>, signifying investor confidence, and thus driving the price upwards.<\/p>\n\n\n\n

Maximum vs circulating supply<\/h2>\n\n\n\n

Crypto investors should not take market cap metrics at face value. There are several differences<\/strong> between the crypto and traditional financial markets that need to be considered. <\/p>\n\n\n\n

In traditional financial markets, \u201cfree float\u201d metrics can differentiate <\/strong>between publicly traded shares<\/a> and those held in \u201clock up,\u201d perhaps by company founders, directors or executives. This differentiates between the total (or \u201cmaximum\u201d) supply and the circulating supply of shares.<\/p>\n\n\n\n

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Similarly, in the crypto sector, a coin\u2019s maximum supply can differ from a coin\u2019s circulating supply<\/strong>, but the difference between these two metrics is not always made abundantly clear.<\/p>\n\n\n\n

Maximum supply refers to the maximum number of crypto <\/strong>coins or tokens<\/strong><\/a> that can ever exist.<\/strong> 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.<\/p>\n\n\n\n

On the other hand, circulating supply<\/strong> refers to the number of coins that exist in open circulation (free float) at any given time.<\/p>\n\n\n\n

These metrics can differ<\/strong>. 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<\/a>. Some coins are lost over time, and others may simply remain stagnant in anonymous wallets. <\/p>\n\n\n\n

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Tip:<\/strong> Investors should understand how various factors can influence the total and circulating supply of a cryptoasset.<\/p>\n<\/div><\/div>\n\n\n\n

Generally, market cap calculations are determined using circulating supply metrics<\/strong>. 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.<\/p>\n\n\n\n

How are crypto market caps categorized?<\/h2>\n\n\n\n

Cryptos fall into one of three categories<\/strong>, depending on the value of their market cap, namely Large-Cap, Medium-Cap and Small-Cap. Each market cap comes with a \u201crisk\u201d level. Large-cap hold the least perceived risk and are generally more established cryptos.<\/p>\n\n\n\n

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Large-cap cryptocurrencies<\/strong><\/th>Medium-cap cryptocurrencies<\/strong><\/th>Small-cap cryptocurrencies<\/strong><\/th><\/tr><\/thead>
Large-cap cryptocurrencies have a market cap of over $10bn.<\/strong> They are generally considered lower-risk investments, as they have more liquidity and are better able to withstand market volatility<\/e-tip>. Example: Ethereum (ETH<\/a>)<\/td>Mid-cap cryptocurrencies have a market cap of between $1bn and $10bn.<\/strong> 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. Example: Stellar (XLM<\/a>)<\/td>Small-cap cryptocurrencies have a market cap of lower than $1bn<\/strong>, 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<\/e-tip> to withstand sudden, or high-volume, market movements. Example, Axie Infinity (AXS<\/a>)<\/td><\/tr><\/tbody><\/table><\/div><\/div><\/figure>\n\n\n\n

What are the largest crypto market caps?<\/h2>\n\n\n\n

Investors will likely be familiar with some of the largest market-cap cryptocurrencies<\/strong>. These include Bitcoin, Ethereum and Solana.<\/p>\n\n\n\n

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