What is the market capitalization of cryptocurrencies
Basic Concepts of BTC Market Cap and Dominance
Before buying cryptocurrency, it is always necessary to make a market analysis, as well as a forecast for the future. A very important indicator for assessing the stability of an asset and the level of risk is the capitalization of cryptocurrencies (MCAP), on the basis of which all ratings and quotations are created.
The market capitalization of a cryptocurrency is the total value of all issued coins. This indicator allows you to analyze the prospects of the token, assess its security and determine the rating. With the growth of this value, the risks are reduced, which contributes to the increase of opportunities for the investor to make a profit.
How to calculate?
You can calculate the market capitalization of cryptocurrency using the formula:
MCAP = current price * number of tokens in circulation
Keep in mind that the cryptocurrency market is characterized by high volatility, which means that the MCAP also changes over time.
For example, consider the market capitalization of well-known cryptocurrencies.
- Bitcoin, Tether, Ethereum, Solana, Ripple, USDC, Cardano, Dogecoin are large-cap cryptocurrencies, and their MCAP values exceed $10 billion.
- TRON, Toncoin, Chainlink, Polygon, Polkadot, Litecoin, Dai, Shiba Inu, Bitcoin Cash are mid-cap cryptocurrencies. The MCAP value of these coins is in the range of $1-$10 billion (These assets can bring a good income, when invested for a long period)
- Neo, Axie Infinity, The Sandbox, Decentraland, PEPE, Zcash are already an example of cryptocurrencies with a small capitalization, and their MCAP value is below $1 billion. (Investing in these coins is even more risky, but the profits can be higher).
The total capitalization of cryptocurrencies (this is the sum of the MCAP values of all existing cryptotokens) in 2023 ranged from $831.8 billion to $1.392 trillion.
Another interesting indicator of the state of the cryptocurrency market is the dominance of Bitcoin.
Bitcoin's market dominance reflects its share of the total market capitalization of cryptocurrencies. This is an indicator that allows you to assess how significant and influential Bitcoin is compared to other cryptocurrencies. Dominance is expressed as a percentage and is calculated by dividing the market capitalization of Bitcoin by the total market capitalization of the 125 largest cryptocurrencies.
The minimum value of Bitcoin dominance in 2023 was 39.48%, the maximum value was 53.15%.
The increase in the share of BTC indicates the growing interest of investors in this cryptocurrency. A decrease, on the contrary, indicates that attention is switching to altcoins.