Market capitalization (often shortened to market cap) is the approximate total value of a cryptocurrency, typically shown in US dollars. The market cap of a cryptocurrency is calculated by multiplying the number of coins or tokens in existence by its current price. The total market capitalization of the flagship cryptocurrency Bitcoin has surpassed that of payments giant Mastercard, earning BTC the 16 th place in a list of the largest companies in the world by market capitalization.. According to monitoring resource Asset Dash, as first reported by Decrypt, the market capitalization of Mastercard is of $ billion, while the market capitalization of. Nov 17, · Bitcoin Is Now Bigger Than Bank of America, Netflix, and Shopify Markets Nov. 6, Bitcoin is now worth $15, with a market cap of $ billion, making it the 21st biggest asset in the world by market cap, according to Asset Dash.
Top bitcoin market capNomics: Crypto Market Caps - Prices, All-Time Highs, Charts
Your Practice. Popular Courses. News Markets News. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Related Articles. Bitcoin Bitcoin's Price History. Partner Links. Related Terms What is Dogecoin? Dogecoin is a peer-to-peer, open-source cryptocurrency that is categorized as an altcoin. Started in as a joke, Dogecoin has a loyal fanbase. The market reached this level on January 7, Crypto market cap is calculated the same way as stock market cap, by multiplying the circulating supply of an asset by its price in fiat currency e.
The calculation gets trickier when an asset is traded against another asset. Price depends on who makes the calculation. The general price is calculated as a composite of spot prices used on crypto exchanges. For index funds, which have recently become popular, the calculation is adjusted to include variation in trading pair prices. The price that you see on online news aggregators Google, for example is usually the average price at which an asset trades on leading exchanges.
In the crypto space, the problem of inadequate pricing is well-known. Most pricing index issuers fail to detail how they price instruments or where they get their data. At Nomics, we strive to set this right. Our methodology takes the price at which an instrument last traded on each exchange, weighted by the general trading volume over the past 24 hours. More on our methodology here.
When it comes to supply, it is worth noting that the calculation depends entirely on the token and the mechanics of its protocol. Although Bitcoin has a finite supply 21 million , most tokens are designed with a dynamic supply that increases over time.
When calculating the market cap of a particular cryptoasset, it is the circulating supply that should be taken into account. Circulating supply is the number of tokens that are currently available on the market. Circulating supply is a better metric than total supply because it excludes coins that are reserved or locked. To find Bitcoin's market cap, locate the value in the "market cap" column associated with the Bitcoin record in the table above.
It is worth noting that, due to the finite supply of Bitcoin, at some point, circulating supply and total supply will be equal. Some investors view low market cap as synonymous with high profit potential. That is why many market participants favor cryptocurrencies with low market caps. They believe these currencies have more room for price appreciation.
Others view low market cap cryptocurrencies as ground-floor opportunities. Whatever the reasoning, low market cap cryptocurrencies are popular investments. Nomics lists cryptocurrencies with market caps as low as a few thousand dollars. However, you should avoid choosing an investment by market cap alone. Consider additional factors such as recent price changes, trading volume, circulating supply, and transparent volume, a feature unique to Nomics that shows the percentage of trading volume that occurs on reputable cryptocurrency exchanges.
For more on transparency volume, see here. Market capitalization is often used to indicate the value of a company or stock. It is calculated by multiplying the total number of shares outstanding by the price per share.
Investors calculate the value of a cryptocurrency by multiplying its circulating supply by its current price. Though stock and crypto investors use the same indicator, the calculation differs in some respects. To calculate the market cap of a company, multiply shares outstanding by the current price per share.
Shares outstanding reflects all stocks that are currently held by shareholders. It even includes restricted shares held by corporate staff and share blocks held by institutional investors. Price, on the other hand, is affected by internal factors such as profit, expected profit, and plans for growth. How investors perceive these factors influences supply and demand and determines the price of a stock. To find the market cap of a cryptocurrency, multiply circulating supply by current price.
Circulating supply is similar to shares outstanding but only includes tokens that are available in the market.
It excludes coins that are reserved or locked. The price of a cryptocurrency is usually calculated as an average of the spot price at which the instrument trades on leading exchanges. Cryptocurrency pricing in the context of index funds happens in a slightly more sophisticated way and is adjusted to include variation in trading pair prices.
Although market cap is used to value both companies and cryptocurrencies, there are differences in the way it is applied. For instance, shares outstanding takes into account all issued shares, including those held by corporate officers and big investors.
Circulating supply ignores reserved or locked coins. As a result, crypto market cap only includes assets that are available for trading. If crypto market cap followed the same logic as stock market cap, it would be based on total supply.
A far more accurate calculation is achieved by using circulating supply. For more on the cons of using total supply, see the next question below. Another difference is pricing mechanics. While most stocks have fixed issuance mechanisms, in the case of cryptocurrencies, many protocols are designed to expand continuously, thus inflating token supply over time. To compensate, one must analyze market cap in a broader context. The first cryptocurrency, Bitcoin, was launched in This goes to show how young the cryptocurrency market is compared to the stock market, which has had centuries to mature.
We often make the mistake of copying stock market metrics and trying to shoehorn them into the world of cryptocurrencies.
So is the case with market capitalization. Market cap is applied to both stocks and cryptocurrencies, but there are differences in how the metric works in each case.
In the world of stocks, market cap can reveal much about a company including corporate policies for example, the issuance or repurchase of shares , management style, and operational scale. It is often used for its simplicity and relative effectiveness at assessing the quality of a stock. When it comes to cryptocurrencies, however, market cap is not a useful basis for making an investment decision. In fact, many researchers describe crypto market cap as a deceiving indicator that is used only because it is simple.
Despite all that, market cap continues to be used as a leading indicator of cryptoasset quality — even by experienced investors. This is a mistake. Stocks and tokens have very different characteristics. Stocks represent ownership of a company that creates economic and social value. Depending on the type of stock, ownership can provide a shareholder with the right to receive dividends, vote, and participate in procedures aimed at raising liquidity.
Tokens represent participation in a network that may or may not generate value. Tokens do not guarantee claims on profits or participation in sales or ICOs. The truth is, while digital tokens are an exciting asset class, they are fundamentally different than stocks, and using the same indicator to analyze them can result in false or unrepresentative conclusions.
Another problem with crypto market cap is token inflation. With stocks, the total supply is fixed and can rarely be changed. The only way to change it is via a stock split. The increase in circulating supply that takes place over time leads to a higher market cap. It could just mean that there are more tokens in circulation. It may simply indicate that there are fewer tokens in circulation.
Crypto market cap was initially copied from the stock market. Although one of the factors, price, is present in both cases, there was a need to find a crypto metric that replicated the role of shares outstanding.
The option that most resembled shares outstanding was total supply — all coins or tokens that currently exist and are either in circulation or locked. But this opened a loophole. Token owners could artificially inflate their market cap by pre-mining coins and locking them away. In response, total supply was swapped for circulating supply — all coins or tokens that are available for trading, excluding those that are reserved or locked.
Circulating supply was intended to measure liquid supply. This raised new complications, namely how to define which part of supply could be considered liquid. Take lost coins, for example. Circulating supply is incapable of judging which coins are lost forever.
In the case of Bitcoin BTC , it is estimated that up to 4 million coins have been lost. Perhaps the most notable pitfall of the crypto market cap calculation is found in the mechanics of the cryptocurrency market. This is why we often use a metric known as redemption impact score which measures the likelihood of a large order affecting the price of a cryptoasset. A high redemption impact score indicates a less stable price while a low score indicates that an asset can maintain a relatively stable price through dynamic market activity.
In reality, the majority of cryptocurrencies have high redemption impact scores. Another drawback of crypto market cap is that it is prone to manipulation. This demonstrates how easily market cap can be manipulated when a coin has meager trading volume. The same occurs when a whale, or large investor holding a significant percentage of a cryptocurrency, decides to dump it all at once.
Another way to illustrate how inefficient and even deceiving market cap can be is to imagine that you are launching a cryptocurrency project. Yet another downside to crypto market cap is its inability to measure the value of a project.
Crypto market cap merely reveals the price that investors are willing to pay. It does not express value. Consider overnight price gains. Most of the time, the answer is no. One last thing to bear in mind is that market cap is a reflection of the last price at which a cryptoasset traded. All previous trades were executed at different prices, and there is no guarantee that the last price will be the price at which the next trade executes.
In fact, given the volatility of cryptocurrencies, price is unlikely to remain the same for very long. This normalizes emission schedules between assets to provide a more even comparison. However, FDMC has its flaws. The main one is its inability to deal with protocols designed to inflate supply in perpetuity. This means that no matter how distant the point in time, results may still be skewed.
Another pitfall of FDMC is its assumption that prices will remain constant regardless of changes in supply. Realized cap is another market cap alternative. It improves on circulating supply by excluding coins that have been lost or never activated. UTXO helps avoid the problem of double-spending, or the spending of nonexistent coins. The only downside to realized cap is that it struggles to differentiate coins that are lost entirely from coins that are HODLed for the long haul.
This leads us to one of the most popular alternatives to market cap, market-value-to-realized-value MVRV , which seeks to determine how over- or undervalued a particular asset is by analyzing where it is in its market cycle. MVRV is calculated by dividing market cap by realized cap. The addition of market cycle analysis enhances market cap and makes it more dynamic.
You can learn more about market cap alternatives in the following essay. However, it is worth noting that crypto market cap, or any of its alternatives, represent a single way to evaluate the quality of a cryptoasset. There are other indicators that provide statistical data about the performance of cryptoassets and characteristics that might be detrimental to their long-term health. To fully understand them, we must first look at the stock market.
Cryptocurrency analysts have attempted to adapt this framework into metrics such as network-value-to-Metcalfe NVM and network-value-to-transactions NVT. The law is usually applied to online networks, but it is also considered useful in the world of cryptocurrencies.
According to the law, the more people who use a network, the more utility each person derives. This also leads to a higher network value. Cryptocurrency analysts use NVM to determine how over- or undervalued an asset may be. The next ratio, NVT, focuses on transaction volume. In place of earnings, NVT substitutes network transactions and divides market cap by daily transaction volume.
Low NVT indicates an undervalued network. Buy support helps explain how liquid a particular asset is and how many buy orders should be expected. Hopefully, this demonstrates that crypto market cap is an incomplete metric and that investors who rely on it exclusively do so at their peril. Although market cap is the most popular indicator of cryptoasset value, it is inefficient at estimating asset quality and struggles to provide actionable data.
For these reasons, crypto market cap should always be backed by additional market metrics. There are two ways to raise the market cap of a crypto project. We have already examined the drawbacks of market cap. To summarize, it presents investors with a price rather than a value.
This means that if you want to raise the price of a cryptocurrency, focus on increasing the value of the network. The first step is to attract as many active users as possible. The bigger the network, the more stable and attractive it is. Vitalik Buterin, the founder of Ethereum ETH , listed several characteristics that increase the value of a network:. But how does a network reach a point where it attracts new users on a regular basis?
Before a network attracts users continuously and naturally, it must meet certain prerequisites. For a coin to be valuable, it must have a strong use case. A protocol must solve a real-world problem. It could tackle a market pain point or provide value to investors in the form of utility rights or as a medium of exchange on a platform. When a coin has a proven use case, there is an incentive for investors to buy, hold, or spend it.
Consider Ethereum. The more developers there are, the bigger the demand for ETH, and the higher its price goes. The result: a higher network value and a higher market cap.
The aim of each cryptocurrency is mass adoption. That said, having real-world applications remains a difficult task for most crypto projects. It is a long and complicated journey, but it is the right path to follow. In some cases, scarcity can result in increased value. The more rare an asset, the more expensive it becomes. This is certainly the case with Bitcoin BTC. Its fixed supply means that its protocol cannot continuously issue new tokens, and many experts believe that the closer we get to the moment when all coins are mined, the higher the price will rise.
This principle is valid mostly for coins with real-world use cases. A large number of coins are designed with continuously expanding protocols. Scarcity is a useful tool for project owners who wish to control the market cap of their tokens, but it should be used appropriately.
Another way to boost market cap is to get listed on as many reputable crypto exchanges as possible. However, getting listed on exchanges cannot be the final goal. Projects that are listed on leading exchanges are usually considered more reputable and find it easier to attract investors.
This then leads to higher liquidity, which, combined with a higher market cap, can turn a cryptoasset into a preferred investment opportunity. For more information on how to get listed on an exchange and remain successful afterward, check our Cryptocurrency Exchanges FAQ.
Projects that hit roadmap milestones on time have a higher perceived value. Backing from well-known companies means more transparency and a more natural path for projects to establish themselves on the market.
Projects that have a stable or increasing base of followers are more attractive to investors: the higher the number of active contributors, the more progressive a network will become.
Think of it like the snowball effect — the more people there are on a network, the more will be interested in joining. Node count reveals how many active wallets exist on a network. The higher the number, the stronger the network is. However, a high node count or a large community is not enough.
Projects must also listen to their users, who can spot points of friction or recommend features that work well on other networks. The truth is, the market — or user behavior — can tell a project everything it needs to know. There is nothing more harmful to a cryptocurrency than a bad reputation.
There have also been several cases of projects using whitepapers copied from other projects without changing anything but the organization and token name. Although some investors will fall for a bogus whitepaper, it is usually a recipe for disaster. Investors also tend to avoid tokens that have a history of security breaches or protocol issues.
In fact, if a project shows that it overcame a security issue and bounced back stronger, it will reflect positively on the long-term vision of the project and the quality of the team behind it.
In recent years, the marketing of cryptoasset projects has become increasingly important. Competition forces projects to continuously improve their marketing communications and adopt different channels to discover new audience members. However, in most cases, projects should spend at least some money on marketing and PR. To determine the maximum cryptocurrency market cap, we need max values for price and circulating supply. Generally speaking, the price of a cryptocurrency is determined by supply and demand.
Unfortunately, demand is almost impossible to predict. Depending on outside factors, such as a ban on cryptocurrencies, it may even drop below its current price.
The asset was developed and launched just over a decade ago, and has seen an enormous gain in market cap, trading price, and popularity since inception and it continues to show signs of bullish growth. The gold market in the past decade has remained mostly stable, with the exception of a sharp decline in From there, the precious metal regained its value to see a positive incline in value over the past two years. Bitcoin has seen a lot more volatility in the past few years than gold, given how the market has been in a constant state of adoption and correction.
Bitcoin saw its first spike at the end of , marking its first cycle of increases. Since then, it continued at a reasonably steady rate until midway through last year, where it lost and gained value with characteristic volatility.
Like gold traders, Bitcoin and cryptocurrency traders tend to buy and sell according to numerous factors, including the price of fiat assets and the economic movements of the US Dollar.