All About Market Capitalization in India : Part - 2


This is the second part for fundamentals of Market Capitalization.

Market cap is another short name of market capitalization. It is a pointer that measures and traces the market value of a cryptocurrency and the stocks. Market capitalization is used as an indicator to determine the dominance and demand of stocks and cryptocurrencies.

 

Although it is a widely used metric, educate yourself well before making trading decisions. In this article, you will learn the fundamentals of market capitalization.

 

What Is the Market Cap?

 

Market capitalization is an indicator that measures and tracks the market value of a stock and cryptocurrency. In general, the higher the market capitalization, the more dominant it will be considered in the market. 


For this reason, market capitalization is often considered the most important indicator when ranking cryptocurrencies and stocks.

 

Market cap measures the worth of an organization in the open marketplace, in addition to the market's notion of its future potentialities as it reflects what investors want.

 

Market Cap for Cryptocurrency

 

In simple words, the market cap for cryptocurrencies is the total value of all the coins that have been circulating in the market. It is a sincere way of finding out how great a digital currency is and how suitable it is for investing. It is a pointer that measures and keeps the updates of the market value of a cryptocurrency.

 

Specifically for cryptocurrency, Coinmarketcap is currently one of the most popular websites to track the market capitalization of cryptocurrencies and to get an overview of the popularity of each coin. It also offers the world's most popular index of crypto assets for all financial metrics relevant to cryptocurrencies.

 

Keep in mind that it is important to monitor the circulating supply of a cryptocurrency, not the total supply. Only circulating currency is available on the market right now. The market capitalization of a cryptocurrency more or less reflects the popularity of that currency in the long term."

 

How Is Market Capitalization Calculated for Cryptocurrency?

You might be wondering how to calculate or find out this much important aspect of trading. So, here is a simplistic formula that you can use. The market capitalization of a cryptocurrency is equal to the current price multiplied by the circulating supply.

 

Market Cap = Current Price of the cryptocurrency X Circulating Supply of the cryptocurrency

 

Is Market Capitalization a Useful Way to Measure the Popularity of a Cryptocurrency?

Although the market capitalization of a project is still considered the most important indicator of relevance, the concept behind this is often criticized. The reason is that the market capitalization of a cryptocurrency more or less reflects the popularity of a coin in the long run.

 

Large-cap cryptocurrencies are generally considered safe investments. There are companies with a market capitalization of more than US $ 10 billion. Investing in large market cap currencies is usually a conservative strategy. These currencies are likely to be less volatile than other cryptocurrencies, but will still be more volatile than other traditional assets like stocks.

 

Mid-capitalized cryptocurrencies are more volatile, but they also have much more growth potential than large-cap cryptocurrencies.

 

Small-cap cryptocurrencies are usually extremely volatile and are considered a very risky investment, although they sometimes have great (short-term) growth potential. However, keep in mind that they can also literally sink from one minute to the next.

 

One must thoroughly research before investing and considering all the factors at play when it comes to the Crypto game. For example, market capitalization as a metric doesn't say much about the exact trading volumes of the last few hours. So, one must check it timely to be at low risk.

 

Therefore, anyone can now conclude that how is market cap important, and as specially described here, its importance in the crypto world. Knowledge of market capitalization will surely help you in trading so thoroughly research about this and collect more information.

 

Written By - Sanskriti Dimri