1. What is Market Cap?

Market capitalization (market cap) is the total market value of a cryptocurrency's circulating supply. It is calculated by multiplying the current market price of a single unit by the circulating supply of coins or tokens.

2. How Does the Calculator Work?

The calculator uses the market cap formula:

Where:

• \( Price \) — Current price of the cryptocurrency in USD ($)
• \( Circulating\ Supply \) — Number of coins currently in circulation

Explanation: This formula provides the total dollar value of all circulating coins at the current market price.

3. Importance of Market Cap Calculation

Details: Market cap is a key metric in cryptocurrency valuation that helps investors compare the relative size of different cryptocurrencies. It's often used to categorize cryptocurrencies into large-cap, mid-cap, and small-cap assets.

4. Using the Calculator

Tips: Enter the current price per coin in USD and the circulating supply of coins. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between market cap and fully diluted valuation?
A: Market cap uses circulating supply, while fully diluted valuation uses maximum supply, showing what the market cap would be if all coins were in circulation.

Q2: Why is market cap important in crypto investing?
A: Market cap helps assess a cryptocurrency's relative size, stability, and growth potential compared to other cryptocurrencies.

Q3: How often should market cap be calculated?
A: Market cap should be calculated regularly as cryptocurrency prices are highly volatile and circulating supplies can change over time.

Q4: Are there limitations to market cap as a metric?
A: Yes, market cap doesn't account for liquidity, token distribution, or locked tokens, and can be manipulated in low-volume markets.

Q5: How does market cap relate to trading volume?
A: Market cap represents total value, while trading volume shows how much is being traded. High volume relative to market cap indicates higher liquidity.