{"id":9622,"date":"2023-07-23T16:06:26","date_gmt":"2023-07-23T16:06:26","guid":{"rendered":"https:\/\/www.bitnovo.com\/blog\/?p=9622"},"modified":"2026-04-22T09:52:33","modified_gmt":"2026-04-22T09:52:33","slug":"what-is-market-capitalization-its-use-in-crypto","status":"publish","type":"post","link":"https:\/\/www.bitnovo.com\/blog\/en\/what-is-market-capitalization-its-use-in-crypto","title":{"rendered":"What is market cap in cryptocurrencies? Easy explanation"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Alternar tabla de contenidos\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-market-capitalization-its-use-in-crypto\/#how_market_cap_is_calculated\" >How market cap is calculated<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-market-capitalization-its-use-in-crypto\/#factors_influencing_market_capitalization\" >Factors influencing market capitalization<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-market-capitalization-its-use-in-crypto\/#what_is_market_cap_used_for_in_crypto\" >What is market cap used for in crypto<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-market-capitalization-its-use-in-crypto\/#use_and_application_examples\" >Use and application examples<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-market-capitalization-its-use-in-crypto\/#what_market_cap_tells_you_and_what_it_doesnt\" >What market cap tells you and what it doesn&#8217;t<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-market-capitalization-its-use-in-crypto\/#difference_between_market_cap_and_trading_volume\" >Difference between market cap and trading volume<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-market-capitalization-its-use-in-crypto\/#difference_between_market_cap_and_fully_diluted_valuation\" >Difference between market cap and fully diluted valuation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-market-capitalization-its-use-in-crypto\/#large_cap_mid_cap_and_small_cap_in_cryptocurrencies\" >Large cap, mid cap, and small cap in cryptocurrencies<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-market-capitalization-its-use-in-crypto\/#what_are_small_caps\" >What are small caps?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-market-capitalization-its-use-in-crypto\/#what_are_mid_caps\" >What are mid caps?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-market-capitalization-its-use-in-crypto\/#what_are_large_caps\" >What are large caps?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-market-capitalization-its-use-in-crypto\/#comparison_of_capitalization_in_cryptocurrencies\" >Comparison of capitalization in cryptocurrencies<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-market-capitalization-its-use-in-crypto\/#how_to_use_market_cap_to_analyze_cryptocurrencies\" >How to use market cap to analyze cryptocurrencies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-market-capitalization-its-use-in-crypto\/#common_mistakes_when_looking_at_market_cap_dont_fall_for_them\" >Common mistakes when looking at market cap (Don&#8217;t fall for them!)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-market-capitalization-its-use-in-crypto\/#frequently_asked_questions_about_market_cap\" >Frequently asked questions about market cap<\/a><\/li><\/ul><\/nav><\/div>\n<span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Tiempo de lectura:<\/span> <span class=\"rt-time\"> 10<\/span> <span class=\"rt-label rt-postfix\">minutos<\/span><\/span><p><strong>New to crypto? Perfect, nobody was born knowing.<\/strong>\u00a0Market capitalization, or market cap, is the ultimate metric to know the real value of a crypto project and it is calculated in a simple way: current price x circulating supply. While the price of a single token can be misleading, this figure represents the total value accumulated in the ecosystem, working the same way as in the traditional stock market when measuring the size of a company.<\/p>\n<p><strong>For investors, this metric is a fundamental comparison tool.<\/strong>\u00a0A high <a href=\"https:\/\/en.wikipedia.org\/wiki\/Market_capitalization\">market cap<\/a> usually indicates greater stability and maturity, but it also suggests that the asset has less room for explosive growth or drastic multiplications in its value.\u00a0<strong>Conversely, projects with low market caps are often seen as higher-risk opportunities with higher return potential.<\/strong><\/p>\n<p><strong>However, market cap should not be the only decision-making factor.<\/strong>\u00a0When evaluating an investment, it is crucial to analyze this figure alongside current trends, project stability, and its overall financial situation.\u00a0<strong>In short, it is the compass to understand where an asset is positioned within the global market before making any move.<\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"how_market_cap_is_calculated\"><\/span><strong>How market cap is calculated<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>For traditional companies, you multiply the number of outstanding shares by the value of each one.\u00a0<strong>In the case of cryptocurrencies, it is the number of existing units of a token times its current price.<\/strong>\u00a0By usage and custom, market cap is measured in US dollars as the reference unit.<\/p>\n<p style=\"text-align: center\"><strong>Market Cap = price x coins in circulation<\/strong><\/p>\n<p><strong>Don&#8217;t stress, we are going to break it down so you have it super clear.<\/strong>\u00a0The beautiful thing about the crypto world is that despite how complex it may seem, it is actually very simple. You just <a href=\"https:\/\/coinmarketcap.com\/academy\/glossary\/market-capitalization-market-cap-mcap?8887297c_page=http%3A%2F%2Fhttps_coinmarketcap.com_academy_tr_glossary_market-capitalization-market-cap-mcap.ayush.ayush.xss1.me%2Fblehxss%22canaryxsss%3C%2Fs%3Eblehxss\">need<\/a> the price of your target crypto and multiply it by the number of coins that are circulating at that moment.<\/p>\n<p>For example, as of April 8, 2026,\u00a0<strong>Bitcoin&#8217;s price was around $70,500<\/strong>\u00a0and there are 19.9 million mined units, so it has a market capitalization close to\u00a0<strong>1.4 trillion dollars.<\/strong>\u00a0Applying the formula would look like this:<\/p>\n<p style=\"text-align: center\"><strong>Bitcoin Market Cap = $70,500 \u00d7 19,920,000 = approximately $1.404 trillion.<\/strong><\/p>\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter wp-image-30745 size-full\" src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/1-compressed-1-2.jpg\" alt=\"\" width=\"768\" height=\"526\" srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/1-compressed-1-2.jpg 768w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/1-compressed-1-2-300x205.jpg 300w\" sizes=\"(max-width: 768px) 100vw, 768px\" \/><\/p>\n<h2><span class=\"ez-toc-section\" id=\"factors_influencing_market_capitalization\"><\/span><strong>Factors influencing market capitalization<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>A cryptocurrency&#8217;s market capitalization is not a fixed number.<\/strong>\u00a0It changes constantly, this is because several factors directly influence it. Below we explain what they are and how they work exactly.<\/p>\n<table style=\"height: 231px\" width=\"1130\">\n<thead>\n<tr>\n<td>\n<p style=\"text-align: center\"><strong>Factor<\/strong><\/p>\n<\/td>\n<td style=\"text-align: center\"><strong>How it works<\/strong><\/td>\n<td>\n<p style=\"text-align: center\"><strong>Impact on Market Cap<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>1. Price of the coin<\/td>\n<td>It is the most direct factor. If the value of each unit goes up or down, the capitalization reacts the same.<\/td>\n<td><strong>Direct:<\/strong>\u00a0The higher the price, the higher the capitalization.<\/td>\n<\/tr>\n<tr>\n<td>2. Circulating supply<\/td>\n<td>It refers to the number of coins available. If new units are issued, the total value of the project increases.<\/td>\n<td><strong>Direct:<\/strong>\u00a0The higher the supply, the higher the capitalization.<\/td>\n<\/tr>\n<tr>\n<td>3. Supply and Demand<\/td>\n<td>It is the market force. If there are more buyers than sellers, the price soars.<\/td>\n<td><strong>Variable:<\/strong>\u00a0Buying pressure raises the value; mass selling lowers it.<\/td>\n<\/tr>\n<tr>\n<td>4. News and sentiment<\/td>\n<td>External events, regulations, or influential figures that generate emotions (fear or euphoria).<\/td>\n<td><strong>Psychological:<\/strong>\u00a0Positive news attracts capital; hacks or bans drive it away.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"what_is_market_cap_used_for_in_crypto\"><\/span><strong>What is market cap used for in crypto<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>The true utility of market cap lies in its ability to measure the relative size and weight of a project within the digital ecosystem,<\/strong>\u00a0whether it is a DeFi protocol, a play-to-earn game, or a Web3 community.<\/p>\n<p><strong>This metric acts as an indicator of stability and risk:<\/strong>\u00a0while high-capitalization assets tend to be more resistant to mass sell-offs, small projects are much more vulnerable to volatility, since any significant trade can cause sharp movements in their price due to the smaller amount of money involved.<\/p>\n<p><img decoding=\"async\" class=\"aligncenter wp-image-30746 size-large\" src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/4-compressed-1-2-1024x682.jpg\" alt=\"\" width=\"1024\" height=\"682\" srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/4-compressed-1-2-1024x682.jpg 1024w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/4-compressed-1-2-300x200.jpg 300w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/4-compressed-1-2-768x512.jpg 768w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/4-compressed-1-2.jpg 1280w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/p>\n<p><strong>However, market cap should be understood as a risk assessment tool and not as an infallible oracle.<\/strong>\u00a0Although it helps interpret the growth potential and solidity of an asset against market trends, it cannot predict external factors such as regulatory changes, hacks, or user sentiment.<\/p>\n<p><strong>In the blockchain world, success depends on a series of variables and imponderables<\/strong>\u00a0that impact both the price and the mood of the market, making this figure just one piece, albeit a fundamental one, of the investment puzzle.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"use_and_application_examples\"><\/span><strong>Use and application examples<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li><strong>Size comparison:<\/strong>Allows comparing the size of different crypto projects (e.g., Bitcoin is the one with the largest market capitalization).<\/li>\n<li><strong>Assess volatility:<\/strong>Generally, a high market cap suggests greater stability, while a low market cap usually indicates higher volatility and risk.<\/li>\n<li><strong>Analyze growth:<\/strong>Helps investors determine the stage of a project, for example, identifying high-potential opportunities (small capitalization) or more stable projects (large capitalization).<\/li>\n<\/ul>\n<p><img decoding=\"async\" class=\"aligncenter wp-image-30748 size-large\" src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/2-compressed-1-2-1024x576.jpg\" alt=\"\" width=\"1024\" height=\"576\" srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/2-compressed-1-2-1024x576.jpg 1024w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/2-compressed-1-2-300x169.jpg 300w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/2-compressed-1-2-768x432.jpg 768w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/2-compressed-1-2.jpg 1280w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/p>\n<h2><span class=\"ez-toc-section\" id=\"what_market_cap_tells_you_and_what_it_doesnt\"><\/span><strong>What market cap tells you and what it doesn&#8217;t<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>Market capitalization is the ideal tool to contextualize the size and relevance of a cryptocurrency,<\/strong>\u00a0allowing you to compare projects realistically. However, it is vital to understand that this figure measures the volume of money deposited in an asset, but it does not determine its quality or fair price by itself.<\/p>\n<table style=\"height: 265px\" width=\"1106\">\n<thead>\n<tr>\n<td>\n<p style=\"text-align: center\"><strong>What market cap DOES tell you<\/strong><\/p>\n<\/td>\n<td>\n<p style=\"text-align: center\"><strong>What market cap DOES NOT tell you<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Size and relative weight:<\/strong>\u00a0Allows you to see if a project is a giant (like Bitcoin) or a small venture compared to its competitors.<\/td>\n<td><strong>If it is \u00abcheap\u00bb or \u00abexpensive\u00bb:<\/strong>\u00a0A low market cap does not mean the coin is on sale, nor does a high one mean it is expensive. Price depends on real valuation.<\/td>\n<\/tr>\n<tr>\n<td><strong>Risk and stability level:<\/strong>\u00a0High-capitalization projects tend to be more stable, low-capitalization ones are more volatile and risky.<\/td>\n<td><strong>If it is a good investment:<\/strong>\u00a0A coin can be very popular and have a huge market cap, but be in the middle of a bubble or have weak fundamentals.<\/td>\n<\/tr>\n<tr>\n<td><strong>Popularity and adoption:<\/strong>\u00a0Indicates how much confidence and money the market has deposited in that protocol, Web3 community, or token.<\/td>\n<td><strong>Project quality:<\/strong>\u00a0It does not reflect whether the technology is innovative, whether the team is reliable, or whether the project has real long-term utility.<\/td>\n<\/tr>\n<tr>\n<td><strong>Growth context:<\/strong>\u00a0Helps understand whether the asset has room to double its value or if it is already so large that it will have a hard time continuing to rise.<\/td>\n<td><strong>Future prediction:<\/strong>\u00a0That a coin is big today does not guarantee it cannot collapse due to regulations, hacks, or lack of use.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"difference_between_market_cap_and_trading_volume\"><\/span><strong>Difference between market cap and trading volume<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>It is essential not to confuse the size of a project with its daily activity.<\/strong>\u00a0While Market Cap tells us how much the whole \u00abpie\u00bb is worth, Trading Volume tells us how many slices are being bought and sold in the last 24 hours.<\/p>\n<table style=\"height: 121px\" width=\"1135\">\n<thead>\n<tr>\n<td>\n<p style=\"text-align: center\"><strong>Metric<\/strong><\/p>\n<\/td>\n<td style=\"text-align: center\"><strong>What does it represent?<\/strong><\/td>\n<td style=\"text-align: center\"><strong>Simple analogy<\/strong><\/td>\n<td>\n<p style=\"text-align: center\"><strong>Real utility<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Market Cap<\/strong><\/td>\n<td>The total accumulated value of the project in the market.<\/td>\n<td>The total value of an apartment building.<\/td>\n<td>Indicates the size and long-term stability of the asset.<\/td>\n<\/tr>\n<tr>\n<td><strong>Trading Volume<\/strong><\/td>\n<td>The movement of money (buys and sells) in a period (e.g., 24h).<\/td>\n<td>How many people are entering and leaving the building today.<\/td>\n<td>Indicates the liquidity and immediate interest of investors.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"difference_between_market_cap_and_fully_diluted_valuation\"><\/span><strong>Difference between market cap and fully diluted valuation<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<table>\n<thead>\n<tr>\n<td>\n<p style=\"text-align: center\"><strong>Metric<\/strong><\/p>\n<\/td>\n<td style=\"text-align: center\"><strong>What does it measure?<\/strong><\/td>\n<td style=\"text-align: center\"><strong>Based on&#8230;<\/strong><\/td>\n<td>\n<p style=\"text-align: center\"><strong>Real utility<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Market Cap<\/strong><\/td>\n<td>The current market value.<\/td>\n<td><strong>Circulating Supply:<\/strong>\u00a0The coins that have already been issued and are in people&#8217;s hands.<\/td>\n<td>Tells you the real size of the project today.<\/td>\n<\/tr>\n<tr>\n<td><strong>FDV (Fully Diluted Valuation)<\/strong><\/td>\n<td>The theoretical future value.<\/td>\n<td><strong>Maximum Supply:<\/strong>\u00a0The total coins that will ever exist (including those not yet issued).<\/td>\n<td>Helps you see the impact of future inflation and whether the price could fall when more coins are released.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"large_cap_mid_cap_and_small_cap_in_cryptocurrencies\"><\/span><strong>Large cap, mid cap, and small cap in cryptocurrencies<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>There are different <a href=\"https:\/\/crypto.com\/us\/glossary\/market-cap\">categories<\/a> within market capitalization.<\/strong>\u00a0Generally, three types are recognized: small caps, mid caps, and large caps. They are categories that indicate the size of a crypto project, based on its total value (capitalization).<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-30751 size-large\" src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/5-compressed-1-2-1024x683.jpg\" alt=\"\" width=\"1024\" height=\"683\" srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/5-compressed-1-2-1024x683.jpg 1024w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/5-compressed-1-2-300x200.jpg 300w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/5-compressed-1-2-768x512.jpg 768w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/5-compressed-1-2-1536x1024.jpg 1536w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/5-compressed-1-2.jpg 1920w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/p>\n<h3><span class=\"ez-toc-section\" id=\"what_are_small_caps\"><\/span><strong>What are small caps?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><strong>Small caps are cryptocurrencies with a market capitalization of less than one billion dollars.<\/strong>\u00a0They are generally new or emerging projects that are still gaining a user or follower base.<\/p>\n<p><strong>These coins are often sensitive to hype generated by influencers and positive market sentiment.<\/strong>\u00a0They are often bought by people looking for \u00abthe new Bitcoin\u00bb or who strongly believe in the project&#8217;s future. Before investing in a small cap, we recommend doing thorough research on the coin&#8217;s plans and background.<\/p>\n<h4><strong>What can you expect from a small cap?<\/strong><\/h4>\n<ul>\n<li><strong>Large price fluctuations.<\/strong><\/li>\n<li><strong>Lower liquidity (fewer places to sell the coin).<\/strong><\/li>\n<li><strong>Possibility of high gains, but also risk of losing 100%.<\/strong><\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"what_are_mid_caps\"><\/span><strong>What are mid caps?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><strong>Mid caps are cryptocurrencies with a market capitalization between one and ten billion dollars.<\/strong>\u00a0These projects have usually been active for a while, have a functional product, and a loyal user or investor base. They are less risky than small caps, but still offer interesting growth potential. Of course, even these coins are volatile.<\/p>\n<p><strong>Mid caps are usually actively developing:<\/strong>\u00a0new features, partnerships, or integrations with other blockchains. This can attract more users and thus increase their value.<\/p>\n<h4><strong>What can you expect from a mid cap?<\/strong><\/h4>\n<ul>\n<li><strong>More stable price than small caps, although with movement.<\/strong><\/li>\n<li><strong>Long-term growth, especially if the project continues to evolve.<\/strong><\/li>\n<li><strong>Greater recognition, so they are often on popular exchanges.<\/strong><\/li>\n<li><strong>Risk still present, but with greater probability of project survival.<\/strong><\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"what_are_large_caps\"><\/span><strong>What are large caps?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><strong>Large caps are cryptocurrencies with a market capitalization greater than ten billion dollars.<\/strong>\u00a0Think coins like <a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-bitcoin\">Bitcoin<\/a>, <a href=\"https:\/\/www.bitnovo.com\/blog\/en\/ethereum-wants-to-be-the-neutral-arbiter-of-an-internet-dominated-by-ai\">Ethereum<\/a>, <a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-dogecoin\">Dogecoin<\/a>, and <a href=\"https:\/\/www.bitnovo.com\/blog\/en\/buy-xrp\">Ripple<\/a>. They are projects that have generally been around for years, are used by millions of people worldwide, and have the trust of both individual and institutional investors.<\/p>\n<p><strong>These coins are usually less susceptible to panic,<\/strong>\u00a0and are considered the \u00absafest\u00bb option within the crypto world (as far as can be stated in this market). Large investment funds, banks, and even governments usually look at these coins first before smaller, unknown alternatives.<\/p>\n<h4><strong>What can you expect from a large cap?<\/strong><\/h4>\n<ul>\n<li><strong>Lower risk than with smaller coins.<\/strong><\/li>\n<li><strong>Slower but steady long-term growth.<\/strong><\/li>\n<li><strong>Better availability, you can buy and sell them anywhere.<\/strong><\/li>\n<li><strong>High liquidity, making it easy to enter and exit the market.<\/strong><\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"comparison_of_capitalization_in_cryptocurrencies\"><\/span><strong>Comparison of capitalization in cryptocurrencies<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<table style=\"height: 145px\" width=\"1115\">\n<thead>\n<tr>\n<td>\n<p style=\"text-align: center\"><strong>Feature<\/strong><\/p>\n<\/td>\n<td style=\"text-align: center\"><strong>Small Cap<\/strong><\/td>\n<td style=\"text-align: center\"><strong>Mid Cap<\/strong><\/td>\n<td>\n<p style=\"text-align: center\"><strong>Large Cap<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Capitalization<\/strong><\/td>\n<td>Less than $1 billion<\/td>\n<td>$1B &#8211; $10 billion<\/td>\n<td>Greater than $10 billion<\/td>\n<\/tr>\n<tr>\n<td><strong>Project profile<\/strong><\/td>\n<td>New, emerging, or niche<\/td>\n<td>Active, with functional product<\/td>\n<td>Consolidated and massively used<\/td>\n<\/tr>\n<tr>\n<td><strong>Risk<\/strong><\/td>\n<td>Very high (risk of total loss)<\/td>\n<td>Moderate \/ Present<\/td>\n<td>Lowest in the sector<\/td>\n<\/tr>\n<tr>\n<td><strong>Volatility<\/strong><\/td>\n<td>Large fluctuations (Hype)<\/td>\n<td>Moderate movement<\/td>\n<td>Greater relative stability<\/td>\n<\/tr>\n<tr>\n<td><strong>Liquidity<\/strong><\/td>\n<td>Low (hard to sell)<\/td>\n<td>Good (popular exchanges)<\/td>\n<td>High (total availability)<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"how_to_use_market_cap_to_analyze_cryptocurrencies\"><\/span><strong>How to use market cap to analyze cryptocurrencies<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>To analyze a cryptocurrency like a pro, market cap is just the starting point,<\/strong>\u00a0the first thing you should do is cross-reference it with volume and liquidity. It is useless for a coin to be worth millions on paper if there aren&#8217;t enough people buying and selling (volume) for you to exit your position when you want.<\/p>\n<p><strong>Also, don&#8217;t lose sight of <a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-tokenomics\">tokenomics<\/a>:<\/strong>\u00a0pay close attention to how many coins are yet to come to market (FDV), because if many are going to be released soon, the price of your coins could fall due to pure inflation.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-30750 size-large\" src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/6-compressed-1-3-1024x682.jpg\" alt=\"\" width=\"1024\" height=\"682\" srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/6-compressed-1-3-1024x682.jpg 1024w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/6-compressed-1-3-300x200.jpg 300w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/6-compressed-1-3-768x512.jpg 768w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/6-compressed-1-3.jpg 1280w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/p>\n<p><strong>On the other hand, always put that number in context.<\/strong>\u00a0Compare the market cap of that coin you like with that of its strongest competitors, that will give you a real idea of how much room it has to grow or if it is already too expensive for the sector.<\/p>\n<p><strong>Remember that while large caps are like that giant ship that better withstands storms, small caps are speedboats:<\/strong>\u00a0they can fly, but any wave of hype or an influencer&#8217;s comment can capsize them.\u00a0<strong>The key is to diversify and not get carried away solely by emotion!<\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"common_mistakes_when_looking_at_market_cap_dont_fall_for_them\"><\/span><strong>Common mistakes when looking at market cap (Don&#8217;t fall for them!)<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>As we said, market capitalization can give clues about the situation of a cryptocurrency and the perception of it.\u00a0<strong>But it does not always offer a complete picture.<\/strong><\/p>\n<table style=\"height: 323px\" width=\"1121\">\n<thead>\n<tr>\n<td>\n<p style=\"text-align: center\"><strong>What we think (The mistake)<\/strong><\/p>\n<\/td>\n<td style=\"text-align: center\"><strong>The reality (What actually happens)<\/strong><\/td>\n<td>\n<p style=\"text-align: center\"><strong>Why is it a danger for your pocket?<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>\u00abIt&#8217;s a safe coin because it has a high market cap.\u00bb<\/strong><\/td>\n<td>Market cap can be inflated by pure speculation or momentary hype.<\/td>\n<td>A high number does not guarantee the project is solid, useful, or that it won&#8217;t crash tomorrow.<\/td>\n<\/tr>\n<tr>\n<td><strong>\u00abThat number is the real money people have put in.\u00bb<\/strong><\/td>\n<td>It is just a mathematical multiplication (Price x Coins). It is not a \u00absafe\u00bb with money inside.<\/td>\n<td>If everyone tries to sell at once, the market cap crumbles because there is no real money backing it.<\/td>\n<\/tr>\n<tr>\n<td><strong>\u00abLook how cheap it is! If it reaches Bitcoin&#8217;s market cap, I&#8217;ll be a millionaire.\u00bb<\/strong><\/td>\n<td>Each project is a world. Comparing a new coin to Bitcoin is like comparing a local store to Amazon.<\/td>\n<td>It creates false expectations. Many coins will never reach those levels due to lack of utility or excess supply.<\/td>\n<\/tr>\n<tr>\n<td><strong>\u00abI only look at the current market cap, not the total supply.\u00bb<\/strong><\/td>\n<td>There are coins that still have 90% of their tokens locked up waiting to come to market.<\/td>\n<td>When those coins come out (inflation), the value of yours will be diluted and the price will tend to drop.<\/td>\n<\/tr>\n<tr>\n<td><strong>\u00abIf the market cap is large, I can sell whenever I want.\u00bb<\/strong><\/td>\n<td>You can have a market cap of millions but very low liquidity (no one trading).<\/td>\n<td>If you try to sell a large amount, the price will crash and you will end up selling much cheaper than you thought.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"frequently_asked_questions_about_market_cap\"><\/span><strong>Frequently asked questions about market cap<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<table style=\"height: 270px\" width=\"1121\">\n<thead>\n<tr>\n<td>\n<p style=\"text-align: center\"><strong>Key question<\/strong><\/p>\n<\/td>\n<td style=\"text-align: center\"><strong>The simple answer<\/strong><\/td>\n<td>\n<p style=\"text-align: center\"><strong>Why does it matter to you?<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>What is market cap?<\/strong><\/td>\n<td>It is the total value of a crypto. It&#8217;s like knowing how much an entire company is worth if you wanted to buy it all.<\/td>\n<td>It helps you see the real size of the project and compare it fairly with others.<\/td>\n<\/tr>\n<tr>\n<td><strong>How is it calculated?<\/strong><\/td>\n<td>Current price \u00d7 Coins in circulation. (For example: $70,000 of BTC \u00d7 19.6M coins = $1.37 trillion).<\/td>\n<td>It allows you to see if the price is \u00abreal\u00bb or if there&#8217;s a trick with the number of coins that exist.<\/td>\n<\/tr>\n<tr>\n<td><strong>Higher means less risk?<\/strong><\/td>\n<td>Yes, generally. It&#8217;s like a giant ship: market waves move it less than a small boat.<\/td>\n<td>It gives you more peace of mind if you are looking for a stable investment and don&#8217;t want to see your money disappear due to a scare.<\/td>\n<\/tr>\n<tr>\n<td><strong>Market Cap vs. Volume<\/strong><\/td>\n<td>Cap is the total value, Volume is how much money is moving (buys\/sells) today.<\/td>\n<td>A high Cap without movement is a red flag, it means no one wants to buy or sell that coin.<\/td>\n<\/tr>\n<tr>\n<td><strong>What is a Large Cap?<\/strong><\/td>\n<td>They are the \u00abqueens\u00bb of the market (Bitcoin, Ethereum) with more than $10 billion in value.<\/td>\n<td>They are the foundation of any serious portfolio because they have already proven they are here to stay.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><strong>We have reached the end!<\/strong>\u00a0And to close, keep this idea very clear:\u00a0<strong>Market Cap is like a city map,<\/strong>\u00a0it helps you know where you are standing and how big the terrain is, but it doesn&#8217;t tell you if the restaurant&#8217;s food is good. It is a key tool to orient yourself, but to avoid getting lost, you should always also look at liquidity, tokenomics, and above all, the real utility of the project.<\/p>\n<p><strong>In short, at <a href=\"https:\/\/www.bitnovo.com\/en\">Bitnovo<\/a> we believe that enough with unnecessary complications.<\/strong>\u00a0Here we do not seek to convince everyone, but to connect with those who are already tired of tangled explanations and the same old thing. Between those who only come to break the rules for fashion and those who truly help you navigate safely, the difference is clear.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-29219 size-full\" src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/8-compressed-1-1.jpg\" alt=\"\" width=\"1024\" height=\"576\" srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/8-compressed-1-1.jpg 1024w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/8-compressed-1-1-300x169.jpg 300w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2023\/07\/8-compressed-1-1-768x432.jpg 768w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/p>\n<p><strong>Don&#8217;t let them tell you stories that this is \u00abtoo complex.\u00bb<\/strong>\u00a0The truth is that often they didn&#8217;t want you to understand it to maintain control. Now that you know how the numbers game works,\u00a0<strong>the power to decide is yours!<\/strong><\/p>\n<div id=\"gtx-trans\" style=\"position: absolute;left: 471px;top: 6498.27px\">\n<div class=\"gtx-trans-icon\"><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p><span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Tiempo de lectura:<\/span> <span class=\"rt-time\"> 10<\/span> <span class=\"rt-label rt-postfix\">minutos<\/span><\/span>Discover what Market Cap really means, how it\u2019s calculated, and why banks don\u2019t want you to understand it. Learn to invest wisely and take control with Bitnovo.<\/p>\n","protected":false},"author":12,"featured_media":9623,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[185],"tags":[],"class_list":["post-9622","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blockchain-en"],"_links":{"self":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/posts\/9622","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/comments?post=9622"}],"version-history":[{"count":7,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/posts\/9622\/revisions"}],"predecessor-version":[{"id":30753,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/posts\/9622\/revisions\/30753"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/media\/9623"}],"wp:attachment":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/media?parent=9622"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/categories?post=9622"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/tags?post=9622"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}