07 Aug, 2025
2 minutes
In cryptocurrency, market cap - short for market capitalization - is a key metric used to measure the total value of a digital asset. If you've ever asked "what is market cap in crypto?" or "what is the meaning of market cap in crypto?", it refers to the overall market value of a cryptocurrency based on its current price and circulating supply.
In plain language, market cap provides investors with a sense of relative sizes of different cryptocurrencies.
For example:
The cost of one coin is $2 and there are 10 million coins in supply, so its market cap would be $20 million.
The price of another coin is $40 and there are 500,000 coins in supply, so its market cap would similarly be $20 million - even though per-coin price is much higher.
This is a reasonable measure as it provides a more nuanced view than price. A token could be cheap per token but have an astonishing supply, so the overall market value is much higher than initially apparent.
When people ask "what is a high market cap in crypto?" what they are really asking about is coins like Bitcoin or Ethereum - cryptos that possess tens of billions or hundreds of billions of dollars' worth of market capitalization.
Market cap calculation for cryptocurrency is easy:
Market Cap = Current Price × Circulating Supply
Current Price is the last price on which the cryptocurrency was sold in exchanges.
Circulating Supply is the number of tokens or coins that are in circulation and are present in the market, but not reserved or locked tokens.
One cryptocurrency is priced at $5 and has 50 million circulating tokens. Its Market Cap would be: $5 × 50,000,000 = $250,000,000
This equation is identical to that of normal finance, where market cap is based on which publicly traded stock's capitalization one is calculating.
In order to understand "what is market cap and volume in crypto?", one has to define both:
Market Cap determines the total market value of a cryptocurrency.
Volume is the total quantity of said cryptocurrency that has actually been traded during some time period (most commonly 24 hours).
Both of these are important - market cap is long-term value to investors, and volume is short-term trading activity and liquidity.
In addition to the regular market cap, also considered by investors is the fully diluted market cap - if all tokens which may be (such as locked or still unreleased tokens) were being placed in the market.
To know what is market cap in crypto is just to determine the relative size, risk profile, and growth potential of a cryptocurrency. Market cap provides a snapshot at the time of where a project is in relation to the entire crypto market, so investors can make more informed investment decisions.
A large market cap would most likely mean that a cryptocurrency is mature and old. Bitcoin and Ethereum, for example, with some hundred billion market caps, are quite stable as opposed to small-cap coins.
Market cap levels will generally influence investor strategies:
Large-cap cryptos (> $10 billion): Will generally be viewed as less risky and more established but with lesser growth potential.
Mid-cap coins ($1-$10 billion): Offer risk vs. potential reward ratio.
Small-cap coins (less than $1 billion): More fluctuation with more risk but more potential for profit.
Lower market cap holdings will have more growth potential if the undertaking succeeds but are offset against more likelihood of failure. Market caps basically are compared by investors to figure out whether a cryptocurrency is over- or under-valued compared to similar-sized peers.
Market cap makes it easy to compare with similarly priced and listed cryptocurrencies in the same category. Handy when being forced to make a decision between multiple projects within the same category.
When seeking to answer "what is a high market cap in crypto?", the answer depends on perspective - but typically, the top 10-20 market cap coins are high-cap coins.
In learning about what is a crypto market cap, it is helpful to be familiar with the various categories that are seen by traders and analysts. Categories assist investors in making an approximation of potential reward and risk.
Market cap: Greater than $10 billion
Examples: Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB)
Characteristics: Well-liquidated, extensively used, less volatile compared to small caps.
Market cap: $1-10 billion
Examples: Polygon (MATIC), Avalanche (AVAX)
Characteristics: Growth potential versus stability, usually projects with matured ecosystems.
Market cap: Less than $1 billion
Examples: Most new altcoins and industry tokens
Characteristics: High risk, high reward - susceptible to market changes and speculations.
Knowing these categories informs you where to allocate your portfolio based on your investment time frame and appetite for risk.
While market cap is a valuable metric, it's not a complete measure of a project's potential or stability. If you're asking "what is market cap in crypto mean for real investment decisions?", here are some limitations to keep in mind:
Price Manipulation. Low-volume tokens can be artificially pumped in price, inflating their market cap without real demand or utility.
Unrealized Supply Risk. The supply held and available to use to determine market cap is not including vested or locked tokens. They will dilute the market and drive price when they release.
Liquidity Difference. Market cap high doesn't always mean liquidity high. There are coins that may not necessarily have the availability to trade in real time.
Short-Term Volatility. Crypto market caps will transfer extremely huge values over a limited time frame due to price volatility and thus are comparatively less consistent indicators than conventional markets.
Due to these factors, market cap must be assessed along with other metrics such as volume, developer activity, and community adoption at the time of investment.
When one learns about what is market cap and volume in crypto, one needs to learn how numbers of supply affect these metrics as well.
Circulating Supply is the combined coins or tokens in circulation and really purchased and sold in the marketplace. It does not take into consideration any coins reserved, not yet released, or locked up. Circulating supply is what is applied for the simple market cap formula.
Fully Diluted Supply (FDS) is the overall supply of coins never to run out of after all tokens are complete. FDS already factors in locked coins in smart contracts, team members' coins held, or coins held to be released later.
Key difference: Circulating supply provides us coins in the market then, whereas fully diluted supply provides us a estimate of maximum possible supply later on. Fully diluted market cap can be calculated by applying the current price and then multiplying that by fully diluted supply, and can help provide us with a better estimate of a project's potential value - especially if there are gigantic quantities of tokens that are being released.
Circulating supply are coins available in the market and not locked or reserved. Fully diluted supply are coins which will be available, i.e., unreleased coins. Circulating supply is utilized for calculation of normal market cap, while fully diluted supply is utilized for calculation of fully diluted market cap.
A market cap that is high in cryptocurrency typically has coins in the top 10-20 market cap that are well known to exchange for more than $10 billion. Some of these include [Bitcoin (BTC)](https://exolix.com/currencies/btc){:target="_blank" rel="dofollow"}, [Ethereum (ETH)](https://exolix.com/currencies/eth){:target="_blank" rel="dofollow"}, and [Binance Coin (BNB)](https://exolix.com/currencies/bnb){:target="_blank" rel="dofollow"}. They are widely used and liquid coins.
Market cap is what provides the overall value of a cryptocurrency (price × circulating supply), while volume is all trades of the coin executed during a time frame, typically 24 hours. Market cap shows overall size, while volume shows liquidity and market demand at the time.
Market cap is misleading since it does not account for liquidity, token distribution, and coming supply releases. Low-liquidity tokens yield inflated market caps when they are manipulated in price. Tokens-locked-away coins can see their value disappear when tokens return to the market.
Not always. While larger market cap is generally synonymous with stability and adoption, it is also associated with less growth potential in lower-cap assets. As an investor, market cap must be balanced against technology, use case, team, adoption, and market trends.
