The Crypto Market Cap: A Guide for Beginners

When entering the crypto world, you may have heard the term “market cap,” which stands for market capitalization. Whether you are interested in crypto professionally or as a hobbyist, understanding the nuances of the crypto space and the factors influencing the future of crypto can help you make educated decisions for your future. The crypto market cap has significant implications for financial markets, with higher caps being more stable for investment. If you’re entering a career in crypto, a deep understanding of the crypto market cap and how it influences investment strategies and long-term market predictions can make you an asset in your field.

Discover more about the crypto market cap, how it works, and which professions utilize this knowledge in the crypto space.

What is crypto market cap?

Simply put, the crypto market cap is the relative size of a cryptocurrency. You calculate it by multiplying a coin's market price by how many of the coins are currently in circulation. 

For example, if you valued three coins at $2 each, you can calculate the market cap of that coin by multiplying the number of coins by their value—in this case, 2 x $3 = $6. This same principle applies to all cryptocurrency coins. 

As you might imagine, crypto price deviations can cause huge market cap fluctuations. If you hear the term “global cryptocurrency market capitalization,” that refers to the sum of all cryptocurrency coin market caps.

Read more: How Does Cryptocurrency Work? A Beginner's Guide

Why is crypto market cap important?

The crypto market cap is important because it can act as a rough metric for potential investors about how stable a certain coin is. Essentially, the crypto market cap is a measure of the popularity of a particular cryptocurrency coin. 

For those investing in crypto or interested in its long-term growth, cryptocurrency coins with large market caps can represent the high popularity of the coin and a raised potential for long-term growth. These coins have a longer-term track record of growth and can generally withstand more people cashing out their coins before the price significantly drops. 

You can imagine this similar to a stack of papers. If there is one paper, it would be pretty easy to rip. However, the more papers you stack together, the more difficult it becomes to rip. Crypto market caps are the same way—the “thicker” they are, the less easy they are to manipulate. 

In stocks, you can divide market caps into “large-cap,” “mid-cap,” and “small-cap.” You can categorize crypto market cap sizes similarly. This market cap can help you understand the long-term trends of the crypto coin and whether you are relatively likely to see long-term growth in the coin. While estimates will vary, crypto market caps generally fall into the following categories:

• Large-cap cryptocurrencies: Market caps over $10 billion 

• Mid-cap cryptocurrencies: Market caps between $1 billion and $10 billion

• Small-cap cryptocurrencies: Market caps under $1 billion

However, it is important to recognize that market caps do not represent relative risk. Cryptocurrencies are incredibly volatile, so market cap is just one factor to consider before investing in cryptocurrency. 

What is a liquid market?

A “liquid market” is a market where an investor or trader can easily and quickly sell, buy, or trade a particular asset. “Liquidity,” on the other hand, defines whether you can buy or sell an asset without impacting the market price dramatically. A liquid market has a high volume of available buyers and sellers. Because of this, traders can generally sell their assets and find new assets to buy quickly. Many crypto coins have a liquid market, including Bitcoin. Markets that are “high-volume” and “liquid” are typically favored over lower-volume trading markets. 

What is the difference between circulating supply and fully diluted supply?

Other terms you may hear when learning about the crypto market cap are “circulating supply” and “fully diluted supply.” The circulating supply is the market cap that is currently in existence. This represents the actual supply of coins available on the market at their current price. Miners will eventually mine the fully diluted supply, which is the total number of coins available. Many cryptocurrency coins have a supply limit, which means you can’t mine any more of that particular coin.

What is the current crypto market cap?

As of June 04, 2024, the current global cryptocurrency market cap is over $2.56 trillion [1]. However, this represents a large dip, as the market cap reached nearly $3 trillion in early November 2021. Though the future of cryptocurrency is largely unpredictable, some financial experts predict the market cap could grow by 10 to 100 times its current size. 

For individual coins, the market cap has an equally unpredictable future. However, large-cap coins tend to represent more stability over time. The three largest cryptocurrency coin market caps as of July 21, 2024, are: 

Bitcoin (BTC)

Bitcoin has a price of $67,834 and a market cap of $1.34 trillion [2].

Read more: What Is Bitcoin? (How It Works, Benefits, and Uses)

Ethereum (ETH)

Ethereum has the second largest market cap of any cryptocurrency coin. The market cap for Ethereum is $425 billion, and one coin costs $3,525 [2].

Tether (USDT)

Tether, a stable-value cryptocurrency created to compare to the price of the US dollar, has a current market cap of $112 billion and a trading value of $1.00 per coin [2].

What jobs use the crypto market cap?

Many jobs in the crypto space use knowledge of the crypto market cap to make educated investment decisions. The crypto market cap is an important part of understanding how different coins compare and the relative benefits or drawbacks of each type of coin. 

In addition, knowledge of investment strategies, coin and market trends, and data analytics can help you understand the crypto market cap and its implications. Common jobs in the crypto space that may utilize investment and data analytical skills include:

1. Cryptocurrency analyst

Cryptocurrency analysts analyze cryptocurrency trends and prices to make informed investment decisions and recommendations. To do this, analysts must consider many different factors affecting cryptocurrency's current and future prices, including cryptocurrency coin market caps.

Read more: What Does a Cryptanalyst Do? Career Guide

2. Marketing manager

The role of a marketing manager depends on the needs of the specific company, but most marketing managers in the crypto space are in charge of developing strategic marketing plans and assessing the success of implemented strategies. This may include promoting a specific cryptocurrency coin, application, or related technology. Understanding the market cap of different cryptocurrencies can help you understand the strengths and weaknesses associated with your company’s product or service, understand trend data, and inform future advertising campaigns.

3. Cryptocurrency miner

Cryptocurrency miners solve complex math problems using specialized computer hardware to unearth new cryptocurrency coins and release them into circulation. As a miner, you will make important decisions about which coin to mine. Learning about the market cap of different coins, total available supply, and potential mining benefits can help you determine where to focus your time and resources and ensure you are in the right space.

Read more: Cryptocurrency Explained: Definitions, Skills, and Opportunities

4. Research analyst

Research analysts analyze data from multiple sources to determine its validity, interpret trends, recommend business strategies, and present findings. As a cryptocurrency research analyst, typical job responsibilities may include analyzing data related to topics such as:

• Crypto assets

• Protocols

• Global trends

• Transactional data

• Stakeholders

Read more: How to Become a Research Analyst: A Guide

5. Corporate accountant

Corporate accountants use data from several sources to create reports, manage budgets, allocate funding, and present findings to high-level executives. Companies often use these findings to make business decisions. When assessing where to allocate resources, understanding the market cap of different cryptocurrencies may help corporate accountants determine the right investment for their clients and make appropriate budgeting decisions.

Read more: What Is Business Accounting? (And How to Manage Yours)

Learn more about the crypto market cap.

The crypto market cap represents the total value of all coins that have been mined, either for a specific cryptocurrency coin or for all coins, known as the global market cap. Understanding the crypto market cap can enhance your knowledge of cryptocurrency and help you make educated investment decisions, whether for yourself or within your career. 

When pursuing a career in cryptocurrency, taking courses in emerging markets and cryptocurrency can help you make informed investment decisions, understand jargon specific to the crypto industry, and determine the right next steps for you in this exciting field. To start, consider taking courses on Coursera, such as Decentralized Finance (DeFi) Infrastructure by Duke University or Blockchain and Cryptocurrency Explained, taught by the University of Michigan, to help you build your foundation.