Crypto Tip: What is Market Capitalization?
Crypto is unique. Outside of the technology—which most people don't, unfortunately, care about—participants are fixated on price.
Technology is just a tiny bit of what interests investors. Their bottom line is to see their bank account fatten.
And is precisely what has been happening from the tail-end of 2020. The expansion of crypto prices saw early adopters promoted to the millionaire or billionaire category.
At the same time, successful projects saw their market capitalization rise several folds.
For instance, the Bitcoin market cap, in mid-March 2021, rose to over $1.1 trillion.
The question now is: what is this market capitalization zealous crypto fans keep talking about?
To answer this, we must know that this term applies both in the traditional and crypto world.
The market capitalization of a crypto project, say Bitcoin, is used to estimate its worth.
The term is also applicable when comparing different markets, such as Bitcoin and any global index like the S&P 500.
For valuers, market capitalization is indispensable when estimating the future worth of a project or a sector.
To calculate the market capitalization of any project, one has to multiple its spot price with the total coins/tokens in circulation.
On May 18, 2021, the total market cap of BTC stood at around $842 billion, calculated by multiplying its spot price of $45,092 with a circulating supply of 18,712,871 BTC.
Bitcoin's market cap keeps fluctuating since circulation supply keeps changing—as new coins are brought to circulation—and prices vary.