Market cap is the total value of an asset, calculated by multiplying its current price by the number of units or shares in circulation.
Market capitalization, or market cap, measures the total market value of a company or cryptocurrency. It is calculated by multiplying the current price by the circulating supply of shares or coins.
For example, if a coin trades at $2 and has 100 million coins in circulation, its market cap is $200 million. Market cap is often a better gauge of size than price alone, because a low price with a huge supply can still mean a large total valuation.
Investors use market cap to compare assets and gauge relative risk. Large-cap assets tend to be more established and less volatile, while small-cap assets can offer higher growth potential alongside greater risk.
For crypto, circulating supply excludes locked or not-yet-released tokens, which is why fully diluted valuation can differ significantly from market cap.
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