What Is Market Capitalization?
Market capitalization (market cap) is the total value of a cryptocurrency, calculated as: Current Price × Circulating Supply. If Bitcoin trades at $65,000 with 19.5 million BTC in circulation, its market cap is approximately $1.27 trillion.
How Market Cap Works
Market cap is the primary metric for ranking crypto assets. Categories include:
- Large cap — Above $10B (BTC, ETH, SOL)
- Mid cap — $1B to $10B
- Small cap — $100M to $1B
- Micro cap — Below $100M
Fully Diluted Valuation (FDV) multiplies price by the maximum supply, showing what the market cap would be if all tokens were in circulation.
Why It Matters for Traders
Market cap contextualizes price. A $1 token with 10 billion supply has the same market cap as a $10,000 token with 1 million supply. Understanding market cap prevents the common mistake of thinking "cheap" tokens have more upside. It also reveals relative market size — flipping a $100M project to $1B is more plausible than growing a $100B project to $1T.