What is market cap in crypto
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Why is market cap important in crypto
Market capitalization (market cap) plays a prominent role in traditional investing, but what is crypto market cap? Also, how does the market cap metric work in crypto as opposed to the traditional stock market? We hear the term "market cap" bandied about all the time in crypto. But what does it mean? How does it work? But more importantly, how can investors use it to improve their portfolios? Building a Comprehensive View of Crypto A cryptocurrency market cap, short for market capitalization, is that cryptocurrency's total value. It's calculated by multiplying the current price of the cryptocurrency by the circulating supply, meaning the number of coins currently available.
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Large-cap cryptocurrencies are the ones that have a market cap of over $1B. At the moment, there are 52 large-cap cryptocurrencies, with Bitcoin (BTC) on top with a market cap of $408B. How to incorporate market cap in your portfolio Let’s briefly visit the traditional stock market to ground the terms. When stocks are available for public trading, they are called outstanding shares. This is equivalent to crypto’s circulating supply. The market cap of both would then be calculated by multiplying stocks/coins with the price of each.
What does crypto market cap mean
Lastly, we also need to consider the dynamics of the bull market and the bear market. In a bear market, assets with large market caps such as Ethereum and Bitcoin have less potential for losses because their price fluctuations will not be as large as altcoins with small market caps. This also applies vice versa, in a bull market assets with a large market cap will not increase as much as an altcoin with a small market cap. Determining Investment Strategy Based on Crypto Market Cap The market cap of a cryptocurrency determines its stability and growth potential. Investors can use the market cap to determine whether to invest in a coin for stability or potential.