Market capitalization is an indicator that reflects the market value of cryptocurrencies and often serves as a measure of the popularity of a particular asset.
The capitalization is calculated using the following formula:
Market Capitalization = current price per coin ✕ circulating supply.
It is important to note that this value does not tell us about the amount of money invested in the coin.
What indicate Market Cap
In the traditional securities market, market capitalization helps classify investments (with low/medium/high capitalization). With this information, investors can diversify their investments and manage risks.
In the context of digital assets, market capitalization can also be used for investment classification, but it is not as reliable since cryptocurrency is still in its early stages and is inherently a risky instrument. For example Market Cap of Byte Coin is $58.4M.
Nevertheless, understanding market capitalization can help evaluate the potential of a cryptocurrency.
For example, coins with high capitalization are considered more reliable investments and are often chosen within a conservative strategy, while investments in coins with medium capitalization are associated with higher risks but can provide more active growth.
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