# What is Cryptocurrency Market Cap ? How is it calculated ?

Sep 3, 2021

Are you new to cryptocurrency trading and trying to figure out the various terms associated with it ? Or you have started trading in cryptocurrency and found the terms such as cryptocurrency market cap or coin market cap etc. in the various crypto exchanges such as Binance or Coinbase? Or are you bothered on missing a very important topic during trading in crypto? Then you are in the right place. In this article we shall discuss What is Cryptocurrency Market Cap, Why it matters to you in trading and also How to Calculate The Market Cap.

In simple terms, Cryptocurrency Market Cap or Market Capitalization of a coin is the total valuation of all the coins that have been mined in the world at a particular point of time. Itis calculated by multiplying the current circulating supply (total coins mined and released in the market) of the coin by the price of the coin at a moment.

The formula to find the crypto market cap is :

Market Cap of a coin = ( Current price of a single coin ) x ( Total coins in circulation )

Let’s understand the concept in details with some examples.

If you are new to cryptocurrency and don’t know how and where to start, please read the article : What Is Cryptocurrency? How to start investing in it?

## What is Cryptocurrency Market Cap?

Whenever a new coin is launched in a crypto  exchange, a certain volume of the coin is released in the market with a certain valuation of each coin. So, the product of the total volume of coins released for circulation and the price of a single coin gives the total valuation of the coin in the market. This is the starting market cap of the coin.

As the mining continues, more and coins are introduced in the market.  And also the price of a single coin increases or decreases depending on the action of the buyers and the sellers.  As a result, the market cap also changes with time and is never constant. It changes very frequently with the change in volume of the coin in the market and also the price of a coin.

The current market cap of a coin can be easily found in the  official website of the coins and also in the various crypto exchanges.

However, the best place to watch and compare the market caps of most of the coins can be found in the website  coinmarketcap.com

Below is a screenshot of the homepage ofcoinmarketcap.com, displaying the various coins along with their market cap along with other important parameters relating to a coin.

In the above picture from coinmarketcap.com, we can see the list of various coins along with their respective market cap along with other important figures such as price, volume, circulating supply etc.  Here we can see that at the moment this blog was being written the market cap of Bitcoin was \$948,783,366,814 and similarly the market cap of Ethereum was \$463,485,284,223. These figures can also be found in the official website of the major cryptocurrencies and crypto exchanges.

`Note : Point to keep in mind is that the value shown in this article will not match to the values you find during reading this article as the volume of the currency also the price of a coin changes every movement.`

## How To Calculate The Crypto Market Cap

As mentioned in the introduction, the market cap of a coin can be calculated easily by multiplying the current price of the coin  to the total coin in circulation. Let us put that in a mathematical formula as follows.

Let (P) = the current price of a coin.

Let (C) = the total coin in circulation at the moment.

Let (M) = the market capitalization of the coin to be calculated.

So, the market capitalization of a coin can be found from the below formula

M =  P x C

Let us take an example from the figure from coinmarketcap.com.

In the above figure, we can see e that the current price of Bitcoin is \$50,426.87 and current circulating supply is 18,805,450.

Hence, the market capitalization(M) of Bitcoin at that moment can be calculated as

M of Bitcoin =\$50,426.87 x18,805,450 = \$948,299,982,441

Similarly, themarket capitalization(M) ofEthereum can be calculated as follows

M of Ethereum = \$3939.75 x 117,374,965 = \$462,428,018,358

So this is how the market cap of a coin is calculated.

`Note :  The difference between the market cap of Bitcoin and Ethereum in the image to the one we have calculated above is due to the frequency at which the website coinmarketcap.com updates the fields. `

## Why It Matters To You ?

Crypto Market Cap of a coin helps us in having a rough idea of how big the market of the coin is. It also helps us in determining the stability of a coin.  It is not such that the coins with high market cap will never go down. But chances are more that a coin of higher market cap gets stable soon as compared to a coin with a low market cap.