Glossary

Market Capitalization

Plain-language definition Crypto glossary

Key takeaways

Market cap is a cryptocurrency's total value: its current price multiplied by its circulating supply.
It is the standard way to compare the relative size of assets — a coin priced in cents can be "larger" than one priced in hundreds of dollars.
Market cap measures size and market perception, not the amount of money that has been invested in a project.

Definition

Market capitalization (“market cap”) is the total value of a cryptocurrency, calculated by multiplying its current price by its circulating supply. It is the standard way to compare the relative size of different assets.

How it works

The formula is simply price × circulating supply. Because it uses circulating supply rather than price alone, market cap explains why a coin priced at a few cents can be “larger” than one priced in the thousands: the cheaper coin may have vastly more units in circulation. A related figure, fully diluted valuation, uses the maximum supply instead, showing what the value would be if every possible token existed.

Why it matters

Market cap is the basis for ranking assets and for building market indices. It is a better size signal than price, but it can be misleading when much of the supply is illiquid or tightly held, since the quoted price reflects only the coins actually trading.

Example

A coin trading at $2 with 100 million coins circulating has a market cap of $200 million, larger than a $50 coin with only 1 million in circulation.

Formula

Market Cap = Price × Circulating Supply

Price is the current market price; circulating supply is the number of coins publicly available and trading.

BTC today: $61.98K × 20.04M ≈ $1.24T.

Compare

Market cap vs fully diluted valuation

Metric	Basis	Reflects
Market cap	Price times circulating supply	Current market value
FDV	Price times maximum supply	Value if fully diluted

FAQ

Frequently asked questions

How is market cap calculated?

Multiply the current price by the circulating supply. For example, a coin trading at $2 with 100 million coins in circulation has a market cap of $200 million.

Does a higher market cap mean a better investment?

Not on its own. A larger market cap generally indicates a more established, less volatile asset, while smaller caps carry more growth potential and more risk. Market cap is one input, not a verdict.

What is the difference between market cap and fully diluted valuation?

Market cap uses circulating supply and reflects current value. Fully diluted valuation (FDV) uses maximum supply, showing what the project would be worth if every coin that can ever exist were already in circulation.