Market capitalization is an indicator that measures and tracks the market value of a cryptocurrency project or individual coin. In general, the higher the market capitalization of a cryptocurrency, the more dominant it is in the market.
How is Market Cap calculated?
The market cap of a cryptocurrency is determined by the current price multiplied by the circulating supply. For example, we have an asset with a total supply of 1,000 coins, all of which are in circulation, and its current market price is $100. So we can calculate the market capitalization: 1,000 (number of coins in circulation) x $100 (market value) = $ 100,000.
The cheaper coin can have a much higher market cap than an expensive coin. That is why market cap is a better estimate of the value of a network than just the price of a single coin.
Cryptocurrency market capitalization is often used as a basis for comparison with other sectors of the economy (precious metals or stocks). This may give an approximate estimate and potential of the crypto market for the coming years.