Importance of Coin Market Capitalisation: Top 25 Cryptocurrencies Prices And Their Market Caps

If you are a crypto investor or person who reads and researches about cryptocurrency, you must have come across a term called coin market capitalisation. 

This is a term that you need to understand as it is directly related to your crypto investment strategies. In this article, you will learn about what coin market capitalisation is, how to calculate it, its importance and how you can use it to make a more informed market decision. 

Let’s dive in. 

What is Coin Market Capitalisation?

Coin market capitalisation or crypto coin market capitalisation is an indicator that you can use to measure and track the market value of a cryptocurrency. You can assess the dominance or popularity of a crypto coin that you are tracking and use it to make informed trading decisions. 

You can calculate the market capitalisation (market cap) of a cryptocurrency by multiplying the price of each coin with its total circulating supply. 

Industry experts use market capitalisation to compare the value of a particular cryptocurrency with that of other crypto coins. This index can help you track the growth of a crypto coin which you are tracking, and you can make an informed decision on whether it is safe to buy that cryptocurrency or target another one. 

Let’s take an example to make you understand better. 

Suppose Crypto A has 3,000,000 coins in circulation, and each coin has a value of $2, then the market cap of that crypto asset is $6,000,000. Now, let’s assume that Crypto B has 1,000,000 coins in circulation. Each coin has a value of $4. Then the total market cap of this crypto coin will be $4,000,000. 

From the above example, you can observe that Crypto B has a higher value per coin. However, the market cap of Crypto A is higher than that of Crypto B due to its overall volume.

Note: The market cap of a cryptocurrency can change rapidly as the value of crypto is volatile. 

You can classify cryptocurrencies under 3 categories based on their market caps. They are:

• Small cap cryptocurrencies

Crypto coins that have a market cap of less than $1 billion are called small-cap cryptocurrencies. They are the most prone to dramatic volatility based on market sentiment.  

• Mid-cap cryptocurrencies

Those crypto coins that have their market caps between $1 billion and $10 billion, are called mid-cap cryptocurrencies. Experts say that they have great untapped potential but are also high-risk investments.

• Large-cap cryptocurrencies

Crypto coins that have a market cap of more than $10 billion are large-cap cryptocurrencies. Experts consider them to be lower-risk investments as they have a proven track record of growth and can offer you better liquidity when in need. You can safely conclude that this type of crypto coin can withstand a situation where high volume of investors are liquefying their assets and can successfully absorb impact on its price. 

Note: Large-cap cryptocurrencies can have better stability than small and mid-cap cryptos, but they are in no way as stable as traditional investments assets. 

Market cap is one of the most effective ways of calculating the popularity of a crypto asset, but there are some investors who criticise the concept behind this market index. 

Top 25 Cryptocurrencies And Their Market Caps

The top 25 cryptos and their market caps are shown in the table below:

Market cap and money inflow

The market cap of a cryptocurrency may indicate its popularity and dominance in the market, however, it is not the same as money inflow. It means that it does not represent the amount of money in the market. As the calculation of market cap is based on its price, this is a common misconception. In reality, a small variation in price can easily affect the market cap of a cryptocurrency. 

Let’s take an example for better reference. Suppose the value per coin of Crypto C is at $30. The circulating supply for the coin is 1,000,000. So the market cap for this cryptocurrency will be $30,000,000. 

Now, if the investors put in a few million dollars in this asset, its market cap can rise to $35 from $30. The market cap will then be $35,000,000. This does not mean that there was a cash inflow of $5,000,000 in the market. 

Another thing to keep in mind is that the amount of money needed to increase the price of a cryptocurrency in this manner depends on its volume and liquidity. The volume in this case refers to the number of assets that people exchange within a particular time frame. Liquidity, on the other hand, denotes the degree to which you can easily buy or sell an asset without causing too much of an impact on its price.  

If the market has high volume and good liquidity, it is not easy for a big investor to manipulate the price. It will take a lot of money for him/her to do that as there may be many orders in the order book, and a large portion among them may have different price ranges. 

It is essential to remember that due to price volatility, the market cap of cryptocurrencies is always changing. If you are thinking of investing in a certain crypto coin, do invest in a limited amount. This will help you test out the situation before you go all in. Never invest more than you can afford to lose.