Market capitalization or Cryptocurrency Market Cap is the combined worth of all issued digital currencies. For instance, imagine that there’s a digital currency that has a hundred coins in circulation. Each coin costs 100 USD. The market cap of this is 10,000 USD.

Understanding the live cryptocurrencies prices will help you see the risk and potential for worth growth of a coin. Let’s drive in and explore what Crypto Market Cap is and how Market cap calculated.

How Is The Crypto Market Cap Calculated?

Let’s begin with the definition of Crypto Market Cap.

To put it easy, Crypto Market Cap is the worth of all crypto coins in circulation. To calculate the market cap, you’d multiply the amount every circulating coin by the price of one unit.

Market capitalization is a lot less complicated then it sounds. Let’s explain the market cap rate with an instance.

Imagine that there’s an organization that emitted 100k coins – all are in circulation. One coin costs 5 USD. In order to access the worth potential of the complete company, we need to make the following process – multiply the complete number of its coins or tokens by the worth of one coin. 1,000,000 x 5 = 5 million USD!

A huge market cap in digital currency can indicate both the high price of the one token and a large number of tokens in circulation. The growing virtual currency market cap is a vital aspect for potential investors. It proves that this crypto money is developing and digital currency is becoming an increasingly famous means of payment.

How to utilize the Crypto Market Capitalization for investing?

Traditional crypto investors have access to several financial metrics for risk evolution. For instance, earnings per share and value to earnings ratio! But when it comes to crypto, companies normally do not disclose financial metrics. Or there is even a centralized company that’d share this information.

That is why market cap plays a key part in a major risk indicator. Investors utilize these metrics to know the maturity of digital money. The general law is simple.

Coins with a high market cap are more mature and have less headroom to grow. Devalue in a matter of times, leaving investors with nothing. That’s the game that digital currency investors are willing to play.

Top five digital currencies by Market Cap

Now, let’s take a look at the 5 most well-known investment options. Here’s a list of top 5 digital currencies by crypto market cap.

Bitcoin (BTC)

BTC, the first digital currency is holding the leading spot, and by a huge margin. It has an impressive market cap of 162 Billion USD. The next block halving will take place around the month of May-June 2020. It means the demand and supply for BTC will exceed supply the worth of the coin will grow. The prediction is just based on what we know about conventional financial assets behavior.

Ethereum (ETH)

At the moment of writing, the market cap of the 2nd popular digital currency was more than 23 billion USD. There’s a huge gap among the leader of market BTC and ETH. This year ETH promises to switch from proof of work to proof of stake. It’s an alternative method to validate trades that should be less energy consuming. This move can affect the value of ETH.

Ripple (XRP)

The market cap of Ripple is about 10 billion USD at the time of writing. This digital money has been showing rather poor performance. Ripple has lost 36 percent since last year. The loss might have a link with the recent legal fights. The corporation was accused of selling unregistered securities during the initial coin offering. Potentially, it means huge penalties that’d negatively influence the value of XRP.

Tether (USDT)

Tether is a stable coin by BITFINEXT. It is a crypto model of the USD. Basically, it is a token, which is backed by USD and can serve as its virtual alternative. Tether is widely utilized on Crypto money exchanges, where trading pairs with Tether are rather popular. The main feature of Tether is its capability to keep a stable price while being decentralized and block-based like crypto.

Bitcoin Cash (BCH)

BCH is a fork of BTC. It’s the same as the original BTC. But if features some major enhancements, like the increased block size, the coin has been around for 3 years, but it has managed to become a famous investment tool and currently features a 47 billion market cap. The price of BCH is predicted to grow further in the future.

Cryptocurrency Market Capitalization vs. Stock Market Capitalization

The market cap firstly originates from the securities exchanges. To comprehend the difference between market capitalization in the stock and crypto market, you need to comprehend how the stock market works.

Owning the stock market in an organization renders you a side of its proprietorship. Possession is widely implied 2 things:

⦁ Having the right to a section of the company’s future income distributed as dividends.

⦁ Receive a balanced amount of proceeds in case the business is sold

The all out estimate of the considerable number of offers is the market capitalization of the company. The company’s market capitalization is a gauge of the current capacity to deliver income and its power for development. A huge level of a company’s stock is held by the companies and other big investors.

Bottom Line

A virtual money market cap is a basic parameter that reflects the complete worth of all-digital money in circulation. Roughly, speaking this is a sort of indicator of the market strength of digital money. If you’re considering investing in digital currency, be sure to consider the crypto market cap. Minor live crypto price functions can’t affect the company with a big level of market cap. At a similar time, digital assets that have a low market cap might exhibit rather serious fluctuations over a small period of time.