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Market capitalization, also known as “market cap”, is the measure of the total value of an asset, company, or cryptocurrency. This allows investors and traders to determine the current size of a company or token relative to the rest of the market.
What is Market Cap?

The market cap of an asset is calculated by multiplying the current market price of an asset by the total number of shares (or tokens) available. In other words:

Market cap = price x circulating supply

Using Bitcoin as an example, in September 2022, the price of Bitcoin was roughly $20,000 and there were about 19.1 million BTC issued. This helped its market cap reach $382 billion.

Cryptocurrencies are a relatively young asset class — especially when compared to traditional equities. In the above example, we calculated Bitcoin’s market cap to be $382 billion. By comparison, the Apple market cap ($AAPL) stands at roughly $2.59 trillion.

Fully diluted market cap

In crypto, investors also look at the fully diluted market cap to reach a decision on their investment. This is essentially the same formula as market cap but is applied to the total possible issuance of all coins:

Fully diluted market cap = price x max supply

Let’s take Bitcoin again as an example.

We know that there will only ever be 21 million BTC mined, which would make its fully diluted market cap in September 2022:

Fully diluted market cap = 21 million x $20,000 = $420 billion.

Investors might examine the fully diluted market cap to compare the current value of a crypto project to its potential value over time. Ideally, the fully diluted market cap should be close to the actual market cap as an extreme difference would mean that a coin’s current value is overinflated.

For example, on October 19, 2021, Bitcoin reached an all-time high in price at around $64,000. On that date, its market cap was $1.1 trillion and its diluted market cap was $1.35 trillion, which is a difference of $244 billion. This potentially signified that its value was overinflated.

What to infer from market cap

The market capitalization of an asset can help identify its overall price trend, determine the proper valuation of that asset, and compare its total value to that of other similar assets.

Using the crypto market cap prices, individuals can assess some of the risks associated with investing in that asset. Specifically, assets can be categorized between small, medium, and large market caps.

Large-cap cryptocurrencies are typically worth over $10 billion, have generally been around for longer, and are considered major players in the industry. Examples of large-cap cryptocurrencies include BTC, ETH, USDT, and SOL.

Mid-cap cryptocurrencies have a market cap between $2 and $10 billion and are considered slightly riskier than large-cap cryptos, but with a higher growth potential. Examples of mid-cap cryptocurrencies include DOT, AVAX, LINK, and ALGO.

Small-cap cryptocurrencies include any coins under $2 billion in market cap. These carry the highest investment risk as they can be either tokens for newer projects that enter the market, or ones serving a more niche audience. Examples of small-cap cryptocurrencies include APE, SAND, ZEC, and BAT.

Investors looking to get a general view of how the cryptocurrency industry is going can also look at the total coin market cap, which measures the market cap of all cryptocurrencies combined. This can then be used to assess how the crypto industry is doing, or to compare it to other industries to get an idea of the industry’s relative worth.


  • The market capitalization determines the size and value of an asset and equals current price x current circulating supply.
  • Market cap gives investors a data point to inform their investment decisions by assessing the value of certain cryptocurrencies and comparing them to others.
  • Cryptocurrencies can be categorized by large-cap, mid-cap and small-cap cryptos, with large-cap considered to be less risky and small-caps more speculative.

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