Market capitalization applies to the stock market, cryptocurrencies, and blockchain projects. It shows the market value of a particular cryptocurrency or blockchain network.
An important indicator is the total market capitalization of the entire crypto industry. It can be used as an estimate of the total value of all blockchains and cryptocurrencies in the industry.
Calculating the market capitalization of a cryptocurrency project is simple. While most people will compare the market capitalization of individual projects, it can also be helpful to keep an eye on the big picture.
The total value of all crypto assets is a multiple of the importance of just Bitcoin or Ethereum.
All leading aggregators report the total capitalization of cryptocurrencies. You can track it on the sites: CoinMarketCap & CoinGecko. What does it mean, and what can it tell us about the market? Let’s find out.
What is the capitalization of the crypto market?
Market capitalization, shortened to “market cap,” is the current market value of cryptocurrencies. It is calculated by multiplying the number of crypto assets in circulation by the price of the corresponding asset.
Market capitalization = supply × price
What is the total market capitalization of cryptocurrencies?
Total market capitalization reflects the total value of Bitcoin, altcoins, stablecoins, tokens and other crypto assets in the market combined. The indicator is considered important, because it indicates the size of the industry as a whole.
What is the total capitalization of cryptocurrencies used for?
The total capitalization of cryptocurrencies is often used for comparison with other sectors of the economy. For example, many analysts compare the total market cap of cryptocurrencies to the market cap of precious metals or stocks.
Why do they do it this way? This feature estimates where and how the crypto market could grow in the coming years and decades.
However, no one knows the best way to estimate the value of cryptocurrencies and blockchain projects. These comparisons can be helpful, but they should not be blindly trusted.
Comparison of different financial markets is often useless. Various industries attract different types of investors. Cryptocurrency will not attract stock traders, currency traders, and precious metals speculators by default.
Cryptocurrencies are a new and thriving asset class and should be treated accordingly.
Why can the total capitalization of the crypto market be inaccurate?
Making financial decisions based solely on the total capitalization of the crypto market can be misleading for many reasons.
It is necessary to correctly calculate the market value of each project separately. To do this, you need to take the total supply and multiply it by the price of the asset.
But it can be difficult to find the information you need about an offer. If this data is incorrect, then the rest of the calculations become incorrect.
The market capitalization of some projects can be manipulated. Some designs do this to give a false impression of security and value. Looking only at total market capitalization without asking what it really means leads to dangerous decisions.
Total market capitalization is simply a number that is relevant at a given point in time. It could be nine figures today, nine figures next week, and eight figures six months from now. It is just a snapshot of the cryptocurrency industry at a certain time.
The market capitalization of cryptocurrencies is one of the critical metrics to keep an eye on. It reflects the ebb and flow of the entire cryptocurrency industry.
It is essential to consider other indicators as well. Market capitalization is only part of the puzzle. Other aspects of the industry need to be looked into before making any financial commitment.