Crypto EDU

Market Capitalization

  • August 2, 2021
  • Intermediate
  • investing
Market Cap Delivery (0-00-03-10)

In finance, market capitalization—or market cap—is a way of assessing the total value of a company’s outstanding stock. It’s determined by multiplying the dollar value of a single share by the number of outstanding shares. For example, if a company has 1 million available shares priced at $10 each, then its market cap is $10 million.

The market capitalization of a cryptocurrency is calculated the same way: Take the dollar value of a single coin or token at that moment and multiply it by the total number of coins in circulation. The number is used to assess the relative size of a cryptocurrency project. It can also be a measure of a cryptocurrency’s volatility since, generally speaking, the higher the market cap for a cryptocurrency, the less likely it is that a single transaction would swing the price. 

Why should you care about market capitalization?

It’s an easy way to judge a cryptocurrency’s relative stability. The higher the market cap, generally speaking, the less vulnerable a currency is to the vagaries of the market.

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