Understanding Market Cap

Market cap answers 'how big is this asset, in total?' A cryptocurrency trading at $10 with 1 million coins in circulation has the same $10 million market cap as one trading at $1,000 with 10,000 coins — price alone says nothing about size, which is why market cap, not price, is used to rank and compare cryptocurrencies.

Market capitalization is calculated by multiplying an asset's current price by its circulating supply — the coins that actually exist and can be traded, not the total that will eventually exist or that a project's founders hold back. Some tokens have a fixed, capped supply (Bitcoin is limited to 21 million); others have no cap and issue new coins over time. Because circulating supply varies enormously between projects, comparing raw prices is misleading — a low-priced coin with billions of units can have a far larger market cap than a high-priced coin with a small supply. Market cap is commonly used to group assets into large-cap, mid-cap, and small-cap tiers, which correlate loosely with liquidity and price volatility.

Market Cap = Current Price × Circulating Supply