Within the current blockchain industry, term market cap or capitalization generally refers to the metric, which measures relative size of the cryptocurrency. It’s calculated just by multiplying the market price of the coin and token with total number of the coins that are in circulation.

The market capitalisation is one kind of indicator that will help to measure or keep proper track of this market value. The market cap can also be used as the indicator of dominance & popularity of the cryptocurrencies. Although this metric is used widely, more information to have before making your trading decisions will recommend and most cases it is crypto market cap excluding bitcoin.

What will you do with the market cap?

The market cap generally allows you compare total value of a cryptocurrency with another thus you will be able to make right investment choices. Cryptocurrencies can be classified by the market cap in three important categories:

  • The large-cap cryptocurrencies includes Bitcoin & Ethereum, have the market cap of over $10 billion. The investors consider it as lower risk investments as they have the demonstrated growth record and have the higher liquidity — it means they will withstand the higher range of people that cash without its price getting impacted dramatically.
  • Mid-cap cryptos have got market caps under $1 billion to $10 billion –generally they are considered untapped potential upside and higher risk too.
  • Small-cap cryptos have the market cap of below $1 billion as well as are susceptible to the dramatic swings as per the market sentiment.

To understand in simple terms, the high-volume & liquid market can’t be manipulated easily as there are several orders in an order book & big volume of the orders within different ranges of the price. This will result in the less volatile market; it means that the whale will need plenty of money to manipulate its price.

Like always with the cryptocurrencies, we suggest doing complete research before you plan to invest and consider various factors that are involved. For example, market cap as metric does not say much on the real trading volumes over last some hours.