In this blog we make it our mission to prove that there’s always a simple way to explain things. Have you ever wondered why traditional banks always hold the monopoly on financial information? Why, when they explain things, does it sound like rocket science? The answer is simple: those who don’t understand something are incapable of questioning it or making smart decisions.
Luckily for you, the industry is changing, and now there’s Bitnovo Blog. So today, I’m going to tell you all about a crucial tool anyone can understand in minutes — basically, as long as it takes you to read this article. We’re talking about Market Cap, or market capitalization.
In one sentence, market capitalization is simply the total value of all tokens in circulation for a cryptocurrency. You’ve probably also heard this term in the context of companies and stocks. In that case, it’s the total number of shares multiplied by the price of each one at a given moment. For example, if a company has 10 million shares and each share is worth €1, its capitalization would be €10 million. Easy, right?
Going back to the much more exciting world of crypto, we can see this concept as the “real size” of a crypto project. It goes beyond just the unit price. It’s the difference between knowing whether you’re buying tokens from a billion-dollar project or from a shitcoin.
In the real world, financial institutions use this value to assess a company’s potential, but they rarely bother to explain its importance to investors.
In the crypto world, all the information is completely transparent and available 24/7 whenever you want to check it. You don’t need to pay analysts or “premium” reports—just go to pages like CoinMarketCap and look up the project that interests you.
The formula that gives you power: Market Cap = price x coins in circulation
As you just read, the “secret” formula is very simple:
Market Cap = price x coins in circulation
Don’t stress; let’s break it down so you understand it perfectly. The beautiful thing about the crypto world is that, even though it seems complex, it’s actually very simple. You just need the price of your target crypto and multiply it by the number of coins currently in circulation.
Then you calculate your distance from the Sun and divide it by Earth’s gravity. Just kidding — it’s really just price x circulation. But a bank would probably explain it that complicated.
Now that you have the formula, let’s move to the practical side. A good example to use is Bitcoin. At the time of writing this article, the leading cryptocurrency is worth exactly $114,867 (approximate, since BTC never stays still) and there are about 19.92 million in circulation. Applying the formula:
Bitcoin’s Market Cap = $114,867 × 19,920,000 = approximately $2.291 trillion.
Impressive, right? Here’s a key concept: circulating supply. Two cryptocurrencies can have the same capitalization, but one might be worth $1 with 1 billion tokens in circulation, while another could be $10,000 with only 100,000 tokens in circulation. The price of the crypto doesn’t matter as much — what really matters is the size of its ecosystem.
Market Cap: Your compass in an ocean of volatile prices
Cryptocurrencies are the best example of why market cap matters more than price itself. Imagine you’re about to sail through a storm. You have two boats to choose from.
One small but made of expensive materials, or one large made of cheaper materials but far more stable and massive? It depends on how much you’re willing to risk. Without a doubt, I’d choose the stable one — but some people love danger and bet everything on the small, fancy yacht.
Market Cap works exactly the same way in the crypto ecosystem:
- High Market Cap = Big cruise ship. It means more stability, less vulnerability to whales and market manipulation, but probably won’t multiply your investment 100x overnight. Actually, definitely not.
Obviously, Ethereum, with a market cap of $543.157 billion, isn’t going to suddenly double overnight, but it’s not going to zero because of a tweet either.
- Low Market Cap = Fancy yacht. Extreme volatility, potential for a 50x gain in a short time — but the same potential to vanish from your wallet if someone decides to play god with the market. An anonymous altcoin with a $10 million market cap is very easy to manipulate in both directions. You decide how much risk you’re willing to take.
Here’s what happens to many beginners—and what financial “experts” don’t want you to know. Sometimes we see a coin worth only $0.001 and get excited thinking “it’s super cheap, I can buy millions.” The problem comes when you realize it only has a $50,000 market cap, and what you bought is worth less than the kebab across the street.
From Bitcoin to altcoin: how cryptos are classified by Market Cap
In the world of banking, there are specific terms for classifying companies. They call them “blue chips” or “penny stocks,” depending on whether they are large, solid companies (blue chip) or small companies with a very low share price (penny stocks). In crypto, we keep it simpler.
Cryptocurrencies are much easier to classify. The majority follow a nearly innate market structure:
- Large-cap: Over $10 billion
- Bitcoin, Ethereum, XRP
- When cryptos exceed $10 billion in market cap, they generally become safer and more trustworthy in the market. The risk of scams decreases while liquidity increases.
- Mid-cap: Between $1 billion and $10 billion
- Uniswap, Polkadot, MATIC
- Mid-cap cryptos fall between $1 billion and $10 billion. They aren’t as solid as the titans above, but they’re safer than shitcoins while still maintaining growth potential.
- Low-cap: Under $1 billion
- Any new altcoin or fresh token
- These cryptocurrencies usually have less support on exchanges, very low liquidity, and lighter trading volume. Perfect for those who want some fun or don’t mind risking their money. You’ll need a high-risk tolerance for these.
The great thing about being in crypto rather than banking is that all this info is available on platforms like CoinMarketCap and CoinGecko. You just need to search for the crypto you’re interested in. In the banking world, though, you’d have to pay expensive subscriptions for this kind of data. Banks and traditional systems, as always, charge even for breathing.
Beyond Market Cap: other metrics the system doesn’t want you to check
By now, I hope you see market cap as one of the most important tools. However, there’s more. Other indicators give you an edge over basic investors who just follow price trends.
- 24h Volume: The market is the market, whether in crypto or real life. If no one’s interested in what you have, your product is worthless. So, if no one’s buying or selling a crypto, what’s the point of a big market cap? Volume tells you whether there’s real interest and liquidity behind an asset so you don’t get stuck in something nobody wants.
- Total Supply vs. Circulating Supply: People don’t realize total supply isn’t the same as circulating supply. Many projects have “locked” tokens that will gradually be released, diluting your investment. Total supply tells you how many tokens will eventually exist, not just the ones available now.
- Fully Diluted Valuation (FDV): The previous concept is key to understanding this one, so reread it if needed. FDV multiplies the current price by the total supply (not just circulating). As a result, it shows the “real” value if all tokens were in the market. If FDV is much higher than the current market cap, future selling pressure is likely.
- Dominance: This metric also deserves a special mention. Dominance shows the percentage of total crypto capitalization represented by a specific coin. When market titans like BTC or ETH dominate most of the market, it means investors are seeking safety there. If dominance decreases, it usually means capital is moving to altcoins.
Ready to stop trusting banks? Start taking control of your money.
If you’re reading this, congratulations. It means you’re not satisfied with the crumbs tossed by traditional financial advisors—you go beyond. Now you have the tools to analyze the market like a true professional. The best part? It’s all free, without paying a cent or depending on those “experts” who sell you nothing but empty promises.
With market cap and the tools we’ve given you, it’s now easier to tell a real opportunity from a scam dressed up as a solid project. You now have the power to make data-driven decisions—based on data you collected yourself. No one can fool you anymore. Goodbye to emotions or self-interested recommendations.
It’s time to take full control of your finances. You don’t need any bank’s permission to invest in your future. And if you’re ready, just open an account at Bitnovo and start embracing your freedom. No office hours, no abusive fees. The financial system of the future is here, now, waiting for you to join our community.
