Cryptocurrency market cap is a useful method to know the real value of cryptocurrency. In the coin market cap, you will see coins ranked in descending order of their market cap.
How cryptocurrency market cap is calculated, the market cap of a coin is calculated by the formula: Market cap = Total rotating supply × the price of each coin.
That is, it is a product of the coins' rotating supply and the price of a coin. For example: If coin "A" has 100, 000 coins in rotation and each coin is worth $4, the coin "A" market cap will be 100, 000×4 = $400, 000. Same, if Coin "B" is worth $2 and has been 20, 000 coins in rotation, its market cap will be 20, 000×2 = $40, 000. Even if the price of coin B is more than that of coin A, the total value of coin A will be much more than coin B. This is the reason market cap is a better indicator of a company’s value than the price of its individual tokens.
Big cap, mid cap and small cap: The point of listing by market cap is that it shows how much danger we are dealing with when we want to invest in a cryptocurrency. Cryptocurrencies can be grouped into big caps, mid caps and small caps. Big Cap cryptocurrency have a big market cap and companies with more than $11 billion market cap are known as large cap companies, only Ripple, Ethereum and Bitcoin are known as big cap cryptocurrency. Mid-cap cryptocurrencies have a smaller market cap but are more dangerous than big-cap cryptocurrencies. Cryptocurrency with a market cap of between 1 and 10 billion dollars market cap is mid cap why small cap cryptocurrencies have the smallest market cap and the biggest risk because chances of failure are high. Companies with a market cap of less than a billion dollars are known as small-caps. The market cap shows you a good idea about the growth rate of the cryptocurrency.
Larger or Bigger Cap: For those who decide to invest in a huge cap cryptocurrency, then your investment will likely not experience any major growth and will be considered a "safe” investment and a less erratic investment. Don't forget that cryptocurrencies are a lot more erratic than other traditional stocks, and big cap cryptos might still have a huge scope of growth than big cap shares.
Mid Cap: Mid cap cryptocurrency have lower market cap than big cap, and they have lots more growth ability than the big caps, which is also the reason they have more growth rate. Small Cap: Because they have a low market cap, they are vulnerable to the whims of the market. Simply put, your investment in them may go down to an insignificant amount at an instant.
People invest because they can truly grow in value and give you large returns on your investment, much more than what a large cap or mid-cap cryptocurrency can offer. The main challenge as an investor is to research everything and choose the right combination and how well you should invest your hard-earned money in crypto-currencies. There are three groups of cryptocurrency: the large cap, the mid cap, and the small cap. These classes may not experience growth at the same time. Meaning, mid cap cryptocurrency might grow at a point when your larger cryptocurrency is downgrading. Though it would be a good idea to have a portfolio that is divided and has a good mix of all three groups.
Stock market cap and cryptocurrency market cap: The word market capitalization comes from the stock market. To understand how different market caps work for stocks and cryptocurrency, you need to understand how stocks work. Here is a simple overview. Having stock in a company will give you a share of its ownership. Ownership means having the right to some part of an organization's future income shares in the form of dividends, and receiving an appropriate number of proceeds in case the company is later sold.
The total number of shares is the market cap of the organization and the organization's market cap is the total of its present ability to produce revenue and its ability for growth. A significant percentage of a company’s stock is held by the founders and other big shareholders. So, in the case of cryptocurrencies, large portions of the tokens are held by the company behind the project and by whales who eat up the shares keep them silent in their wallets.