Crypto

What is the Market Cap in Crypto?

Published

2 years ago

January 20, 2024

Comprehensive Analysis: Understanding Market Cap in the Crypto

The worth of a cryptocurrency is frequently determined using the term “market cap.” At its essence, the term is simpler even though it may appear complex. What does it signify, and why is it essential? Let’s analyze it.

Identifying Market Capitalization

Fundamentally, market capitalization gives an overview of an asset’s entire market value. The same formula applies whether evaluating a cryptocurrency or a company’s value on the stock market:

Market Cap is calculated as follows: Current Asset Price x Total Assets in Circulation

When it comes to cryptocurrencies, this refers to:

A cryptocurrency’s market capitalization is equal to its current price times its total circulating supply.

Let’s use a fictitious scenario to clarify.

The market capitalization of a cryptocurrency called “CryptoCoin” would be €10 multiplied by the number of coins in circulation (€10 x 1,000,000 = €10,000,000) if CryptoCoin is selling at €10.

This indicates that €10 million is CryptoCoin’s market capitalization.

What Makes Market Cap Important?

Stability Indicator: A coin with a larger market capitalization is likely more widely accepted and is therefore seen as more mature and stable.

Risk assessment: It is a tool used by investors and traders to evaluate the risk-to-reward ratio. Higher market capitalization cryptocurrencies are often thought to be less hazardous than lower capitalization ones.

Liquidity Indicator: Coins with a larger market capitalization generally have more liquidity, which facilitates buying and selling.

Trend Analysis: Tracking shifts in market capitalization over time might reveal information about probable price fluctuations and the state of the market as a whole.

Cryptocurrency Market Capitalization:

Although the fundamental calculation is simple, there are complications to comprehending market capitalization in cryptocurrency.

Comparing Circulating vs Total Supply: Not every token can be exchanged for another. Some may be reserved, closed, or not available just yet. Therefore, we typically take into account the market cap’s circulating supply rather than its overall supply.

Market Cap Dominance: As of January 10, 2024, the ratio of the market capitalization of Bitcoin to the total market capitalization of cryptocurrencies was less than 50%. This indicates that Bitcoin’s influence over the whole cryptocurrency market has declined recently.

Volume and Market Cap: It’s critical to take market cap and trading volume into account. insufficient trading volume and a large market cap may be signs of insufficient liquidity, which makes it more difficult to buy or sell without changing the price.

Sorting Cryptocurrencies using Market Capitalization

It’s common to hear phrases like “Large Cap,” “Mid Cap,” and “Small Cap” in the cryptocurrency world. Their market capitalization serves as the basis for these divisions:

Large-Cap: Digital assets with a market valuation of more than US$10 billion. For instance, USDC, Tether (USDT), Ethereum (ETH), and Bitcoin (BTC). They are considered to be more trustworthy.

Mid-Cap: Digital assets with a market capitalization ranging from US$1 billion to US$10 billion. Litecoin (LTC), Cardano (ADA), Dogecoin (DOGE), and Polygon (MATIC) are a few examples. Large caps are less risky than these, but they may have greater upside potential.

Small-Cap: Digital assets having a market value of less than US$1 billion. Immutable X (IMX), Axie Infinity (AXS), and Aave (AAVE) are a few examples. They offer a chance for great returns but can also be more risky and erratic.

The Risks of Using Market Cap Exclusively:

Although market capitalization is a significant indicator, it can be deceptive to base investment decisions only on it. This is the reason why:

Market Volatility: The values and market capitalizations of cryptocurrencies can fluctuate quickly.

Price manipulation: Cryptos with smaller market capitalizations may be more vulnerable to it.

Neglecting Other Crucial Elements: Concentrating only on market capitalization may cause one to ignore other essential elements such as the project’s technological solutions, adoption rate, and level of competition.

Conclusion:

For traders, investors, and cryptocurrency fans, market capitalization is an essential instrument. Instead of serving as the only criterion for making decisions, it needs to be used in conjunction with other research instruments. Make sure you have a thorough understanding of the cryptocurrency field, bearing in mind that market capitalization is subject to sudden fluctuations due to the volatile nature of cryptocurrencies. It is imperative, as always, to conduct thorough research and confer with financial experts before to making any investment decisions.

Click to comment

Crypto

Crypto mogul Do Kwon sentenced to 15 years in prison over $40B ‘epic fraud’

Published

2 hours ago

December 11, 2025

Press Room

Crypto mogul Do Kwon sentenced to 15 years in prison over B ‘epic fraud’

Do Kwon, the South Korean cryptocurrency entrepreneur behind two digital currencies that lost an estimated $40 billion in 2022, was sentenced on Thursday to 15 years in prison for for what a judge called an “epic fraud.”

U.S. District Judge Paul A. Engelmayer, who handed down the sentence, sharply rebuked Kwon for repeatedly lying to everyday investors who trusted him with their life savings.

“This was a fraud on an epic, generational scale. In the history of federal prosecutions, there are few frauds that have caused as much harm as you have, Mr. Kwon,” Engelmayer said during a hearing in Manhattan federal court.

Kwon, 34, who co-founded Singapore-based Terraform Labs and developed the TerraUSD and Luna currencies, previously pleaded guilty and admitted to misleading investors about a coin that was supposed to maintain a steady price during periods of crypto market volatility.

He is one of several cryptocurrency moguls to face federal charges after a slump in digital token prices in 2022 prompted the collapse of a number of companies.

Dressed in yellow prison garb, Kwon addressed the court and apologized to his victims, including the hundreds who submitted letters to the court describing the harm they had suffered.

“All of their stories were harrowing and reminded me again of the great losses that I’ve caused. I want to tell these victims that I am sorry,” Kwon said.

Ayyildiz Attila, one of the hundreds of victims who submitted letters to the court, said he lost between $400,000 and $500,000 in the collapse.

“My savings, my future, and the results of years of sacrifice disappeared. I struggled to keep up with payments and responsibilities, and everything I had worked forwas erased,” Attila said.

Kwon’s lawyer Sean Hecker said in an email after the sentencing that Kwon spoke from the heart, expressed genuine remorse and will continue his efforts to make amends.

US Attorney Jay Clayton in Manhattan said in a statement following the hearing that Kwon devised elaborate schemes to inflate the value of his cryptocurrencies and fled accountability when his crimes caught up to him.

Prosecutors had asked for a sentence of at least 12 years in prison, saying the crash of Kwon’s Terra cryptocurrency caused billions of dollars in losses and triggered a cascade of crises in the crypto market.

Kwon’s lawyers had asked that he be sentenced to no more than five years so he can return to South Korea to face criminal charges.

Prosecutors charged Kwon in January with nine criminal counts for securities fraud, wire fraud, commodities fraud and money laundering conspiracy.

Kwon was accused of misleading investors in 2021 about TerraUSD, a so-called stablecoin designed to maintain a value of $1. Prosecutors alleged that when TerraUSD slipped below its $1 peg in May 2021, Kwon told investors a computer algorithm known as “Terra Protocol” had restored the coin’s value.

Instead, Kwon arranged for a high-frequency trading firm to secretly buy millions of dollars of the token to artificially prop up its price, according to charging documents.

Kwon pleaded guilty in August to two counts, conspiracy to defraud and wire fraud, and apologized in court for his conduct.

“I made false and misleading statements about why it regained its peg by failing to disclose a trading firm’s role in restoring that peg,” Kwon said at the time. “What I did was wrong.”

Kwon agreed in 2024 to pay $80 million as a civil fine and be banned from crypto transactions as part of a $4.55 billion settlement he and Terraform reached with the Securities and Exchange Commission.

He also faces charges in South Korea. As part of his plea deal, prosecutors will not oppose Kwon’s potential application to be transferred abroad after serving half his US sentence.

Crypto

Robinhood Sets 2026 Crypto Vision With Expanded Global Access

Published

14 hours ago

December 11, 2025

Press Room

Robinhood signaled a sweeping 2026 crypto expansion, showcasing accelerating platform growth, wider U.S. and European access, and new products capped by a Layer 2 network aimed at propelling the company deeper into global tokenization and advanced digital-asset trading.

Crypto

OCC Clarifies Bank Authority for Regulated Crypto Trade Execution

Published

1 day ago

December 10, 2025

Press Room

OCC Clarifies Bank Authority for Regulated Crypto Trade Execution

U.S. banks won fresh clarity as the OCC confirmed they can execute riskless principal crypto transactions, opening regulated pathways for customer trades while reinforcing safety and compliance expectations across the growing digital-asset market.