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CRYPTOCURRENCY MARKET CAP EXPLAINEDOn the heels of a meteoric bull run, the crypto markets now have a $500 billion market cap, an all-time high. And that number is simply too high. But how can a coin be calculated and checked by the help of market capitalization? We’ll know the reason behind now.
Market cap is a well-known metric for conventional securities, but has got unique implications in crypto. Security would be measured and checked by the usage of market capitalization. This works by increasing the amount of outstanding stock shares by the present stock price. On the other hand, crypto is calculated by circulating supply of tokens increased by current value. If a coin has got 100 tokens outstanding and is trading for $10 a coin, it has a market cap of $1000. There are approximately 18 million bitcoins in existence, and the price is about $9700 at time of writing. Bitcoin’s market cap, therefore, is around $174.5 billion.
Traditionally, bonds and stocks have been analyzed via financial metrics and ratios. To learn the value of stocks, there are a lot of things to check like price-to-earnings ratio, earnings per share, the present ratio, earnings growth, and so forth. Nonetheless, crypto teams don’t publish financial statements, what metrics that do exist are all the more crucial Market cap provides a quick and easy check on how valuable a cryptocurrency is. Today, bitcoin is about $174 billion. Ethereum is the second-biggest, at $23 billion. Litecoin ($5.83 billion, Bitcoin Cash ($5.42 billion), and XPR($13.27 billion) round out the top five.