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Market Cap Formula:
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Market capitalization (market cap) is a measurement of the total value of a cryptocurrency token. It represents the total dollar value of all circulating tokens and is calculated by multiplying the current price per token by the total circulating supply.
The calculator uses the market cap formula:
Where:
Explanation: The market cap provides insight into the relative size and value of a cryptocurrency compared to others in the market.
Details: Market cap is a crucial metric for investors to assess the value and risk of cryptocurrency investments. It helps compare different cryptocurrencies and understand their market position and potential growth.
Tips: Enter the current price per token in USD and the total circulating supply. Both values must be positive numbers to calculate an accurate market cap.
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. Market cap reflects current value, while FDV shows potential future value if all tokens are released.
Q2: Why is market cap important for cryptocurrency ranking?
A: Market cap is the primary metric used to rank cryptocurrencies. Larger market caps generally indicate more established projects with higher liquidity and lower volatility.
Q3: How often should market cap be calculated?
A: Market cap should be calculated regularly as both token price and circulating supply can change frequently in volatile cryptocurrency markets.
Q4: What are the limitations of market cap as a metric?
A: Market cap doesn't account for token distribution, liquidity, or trading volume. It can be manipulated through wash trading or inaccurate circulating supply data.
Q5: How does market cap affect investment decisions?
A: Investors often use market cap to categorize cryptocurrencies (large-cap, mid-cap, small-cap) which helps in portfolio diversification and risk management strategies.