Market Capitalization (Market Cap)
In simple terms
Market cap is the total value of all coins in circulation for a cryptocurrency. Think of it like multiplying a company's stock price by how many shares exist—it tells you the overall worth of the entire cryptocurrency.
Definition
The total value of a cryptocurrency, calculated as price multiplied by circulating supply.
In depth
Market capitalization is derived by multiplying the current price of a single unit by the total circulating supply of tokens in active circulation. This metric excludes locked, vested, or pre-mined tokens not yet released. Market cap serves as a primary indicator for ranking cryptocurrencies by adoption and relative economic significance, though it can be manipulated if circulating supply figures are inaccurate or if price discovery occurs across fragmented liquidity pools with differing spreads.
How does Market Capitalization (Market Cap) work?
Market cap is a multiplication: the current price of one unit times the number of units counted as circulating. Data providers take the price from recent trades and the supply figure from the chain or the issuer, then recompute continuously as price moves. Because the price comes from the most recent trades — often a tiny fraction of total supply — market cap is not the amount of money invested and not the amount that could be withdrawn. Fully diluted valuation uses maximum possible supply instead, usually a larger number. Providers count locked, burned, or team-held tokens differently, so published figures disagree.
An example
Illustrative figures. A token trades at $2.00 with 50 million units circulating, so market cap is $100 million. If maximum supply is 200 million, fully diluted valuation at the same price is $400 million. A single trade at $2.20 lifts quoted market cap to $110 million even though only a few thousand dollars changed hands, which shows why the figure is a calculation, not a measure of money held.
Figures are illustrative only.
What beginners get wrong
- A low price per unit does not make a token 'cheap'; supply is the other half of the calculation and can be enormous.
- Market cap is often read as money that could be cashed out, but selling even a small share of supply moves the price it is built on.
- Comparing projects by market cap alone ignores how much supply is locked or not yet issued, and fully diluted figures can look very different.
Related terms
Part of
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Educational only — not financial advice.