Market Capitalization is an old principle that rules most trading platforms. It applies to cryptocurrency as well, as cryptocurrency is always looking for new ways and tools to enhance the performance of its users. Now you might be wondering if market capitalization is the total market value of some company’s outstanding shares of stock. So how can it be applied to cryptocurrency? Let us look into more details in the coming sections to see how this works and what market capitalization is and how it is calculated for cryptocurrency trades.
What is Market Capitalization
If we start from the most basic and the easiest way to understand it, market capitalization, colloquially known as market cap, indicates the market value of the outstanding shares of a company that are publicly traded.
How is Market Capitalization Calculated
To calculate it one can multiply the number of shares outstanding to the current market value of one.
Market Capitalization = Share Price * Number of Outstanding Shares
It can be used to indicate a number of things like how much a company is worth, how good or how bad it can be to invest in some particular stock and such things for that matter.
Market Capitalization in Cryptocurrency
And this concept has now been extended to cryptocurrency as well. We can use market capitalization for certain crypto tokens to determine their worth and then invest accordingly. Online websites like executium.com can also help us to predict various market capitalization rankings and figures for various cryptocurrency tokens so that we can decide easily. These figures keep on changing based on the position of the exchange from which that particular token comes and many economic forces come into play into deciding all this. Quite sophisticated and complicated mathematics when it comes to calculating market caps for individual tokens it is. Executium.com helps in this regard as well.
What Can Market Capitalization Indicate
Cryptocurrency as a method of trading can be a good tool to amplify side earnings, but sometimes it can lead to losses too. Market capitalization data can be used to minimize risk as it indicates a couple of important things.
- What is the present value of the token?
- What is the forecasted future value of the token?
- Are the prices likely to go up or move down in the coming time for some cryptocurrency token.
- Is a token large-cap, mid-cap or short-cap.
- What is the stage of the crypto token in terms of token development and evolution?
So even if you are an experienced trader or a newbie, and you are trying to rely on market cap figures to base your crypto trading decisions on, you are not on the wrong lines. It's just that you will need some advanced guidance to get back on and executium.com can be a great name for this purpose. It is a name that has become so popular recently, because they are fair in their practices and quite advanced in the solutions they provide.