One of the frequently discussed metrics in the crypto industry is the market cap of a cryptocurrency (short for market capitalization). However, not all investors know what it is and how it is calculated. In this article, we provide a simple and clear explanation of this term.
The market cap of a cryptocurrency represents the total value of all tokens of a particular cryptocurrency currently in circulation. This metric is important for assessing the size of a cryptocurrency and serves as one of the key factors for investors to consider when choosing an assets.
How is Cryptocurrency Market Cap Calculated?
Market cap is determined by two main factors:
- Current token price: reflects the token's current market value.
- Number of tokens in circulation: the total number of tokens available for trading.
Calculation formula:
Market cap = Price per token × Number of tokens in circulation
Fully Diluted Market Cap (FDMC)
Fully diluted market cap (FDMC) is the estimated market capitalization of a cryptocurrency based on its current price, assuming all coins are in circulation. This value is theoretical, as increasing the number of tokens can affect their market price. Additionally, due to tokenomics, emission schedules, and lockups, it can take a significant amount of time before all tokens enter circulation. FDMC is important for assessing the impact of inflation and new token issuance on a token's value. If a cryptocurrency does not have a fixed maximum supply, FDMC cannot be calculated.
Cryptocurrency Classification by Market Cap
Cryptocurrencies are divided into three categories based on their market cap:
- Large-cap cryptocurrencies: assets with a market capitalization over 10 billion USDT, which are characterized by a high degree of security and liquidity.
- Mid-cap cryptocurrencies: cryptocurrencies with a market capitalization between 1 billion and 10 billion USDT, which may have higher volatility compared to cryptocurrencies in the first category.
- Small-cap cryptocurrencies: assets with a market capitalization below 1 billion USDT. This category includes innovative and promising projects with significant volatility, offering potential short-term profit opportunities. It is essential to thoroughly research such projects to make informed investment decisions.
Market capitalization helps assess the scale and potential of a cryptocurrency, which is a key aspect for investors when making decisions.
There are many online resources where you can check the market capitalization of cryptocurrencies.
The market cap of the Spintria token can be viewed on CoinGecko.
Stay tuned to our channel — soon the Spintria token will be available for tracking on CoinMarketCap.
*Spintria does not provide investment recommendations, this material is published for informational purposes only.
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