What Is Market Cap in Crypto? How Coins Are Ranked by Size

Market cap, short for market capitalization, is what every coin in circulation is worth added together at today's price. The sum is one line: price multiplied by the number of coins in circulation. It exists because price on its own says nothing about size. A coin worth fifty cents can be far bigger than a coin worth five hundred dollars, depending on how many of each exist.

Why is the price of one coin misleading?

Think of company shares. One firm's shares cost ten dollars, another's cost a thousand, and that tells you nothing about which firm is larger — you have to multiply by the number of shares. Coins work the same way. Bitcoin will never have more than 21 million coins, so each one carries a large share of the network's value. Dogecoin has well over a hundred billion coins and mints more every year, so each one carries a tiny share. Comparing the two prices is meaningless; comparing the two market caps is not.

What does market cap actually tell you?

Mainly size and, roughly, how easy something is to buy and sell. Big networks like Bitcoin and Ethereum have deep markets, so a large order barely moves the price. A small coin can jump or collapse on a single trade. What market cap is not is money invested: a coin with a billion-dollar cap did not take in a billion dollars, because the last trade sets the price for every coin in existence. Nor is it money that could be taken out — try to sell all of it and the price would fall long before you finished.

Circulating supply or all of it?

Ranking sites show two numbers. Market cap counts only the coins in circulation now. Fully diluted valuation counts every coin that will ever exist, including the ones a team has locked away for later. If a project has released a tenth of its supply, the second number is ten times the first, and those locked coins can arrive on the market later. Checking both takes ten seconds and explains a lot.

Practical habit: when you compare two projects, put their market caps side by side and ignore the price per coin entirely. Then look at how much of the supply is still locked. Related reading: why there will only be 21 million bitcoin and what altcoins are.