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Do you want to know how to calculate the market capitalization for cryptocurrencies? Check out this blog post to find out how to do it.
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What is Market Cap?
Market cap is one of the most commonly used terms in the cryptocurrency space yet it remains one of the least understood metrics. In this article, we’ll explain what market cap is and how to calculate it for any cryptocurrency.
Market cap is short for market capitalization. It’s a metric used to measure the size of a cryptocurrency. To calculate market cap, you multiply the total supply of a coin by its current price.
For example, let’s say there are 16 million Bitcoin (BTC) in circulation and each coin is currently worth $4,000. The market cap of Bitcoin would be calculated as 16 million x $4,000, which equals $64 billion.
It’s important to note that market cap doesn’t necessarily reflect the real value of a cryptocurrency. Rather, it’s simply a way to measure and compare the relative size of different coins.
A cryptocurrency with a high market cap is usually more well-known and widely traded than one with a lower market cap. However, this isn’t always the case. There are many small-cap coins that have strong communities and offer unique features or advantages over larger coins.
One thing to keep in mind when using market cap as a metric is that it doesn’t take into account the circulating supply of a coin. For example, if there are two coins with equal market caps but one has twice as many coins in circulation, the second coin will actually be worth more on an individual basis ($ per coin).
In general, though, higher market cap usually equals higher value per coin (and vice versa).
How to Calculate Market Cap for Cryptocurrencies
Cryptocurrency market capitalization is one of the most important concepts to understand when valuing a digital asset. Market cap is calculated by multiplying the circulating supply of a coin by its current price. This gives us a good idea of the relative size of a cryptocurrency.
Find the Circulating Supply
To find a cryptocurrency’s market cap, start by finding the circulating supply. The circulating supply is the number of units that are currently available for trade. To find this data, look on the cryptocurrency’s website or on a data aggregator like CoinMarketCap.com.
For example, as of July 2018, there were just over 16.8 million Bitcoin in circulation. By comparison, there were approximately 3 Ripple in circulation and over 25 million Litecoin. So, even though Bitcoin has a lower price per unit, it has a higher market cap because there are more units available for trade.
Multiply the Circulating Supply by the Price Per Coin
The market capitalization for a cryptocurrency is calculated by multiplying the total supply of coins by the price per coin. In other words, it is a measure of how much a cryptocurrency is worth.
The total supply of a cryptocurrency can be found on the blockchain or in the white paper. The price per coin can be found on exchanges or from data providers.
To calculate the market cap for a cryptocurrency, simply multiply the circulating supply by the price per coin.
For example, if there are 10 million coins in circulation and each coin is trading at $1, then the market cap would be $10 million.
