What is market cap (market capitalization)?
The total value of an asset's circulating supply: price multiplied by number of coins in circulation.
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In this entry
The total value of an asset's circulating supply: price multiplied by number of coins in circulation.
Market cap, not price per coin, is the standard measure of an asset's size. It is the number ranking tables sort by, the number index products weight by, and the first figure most people look at when comparing two assets. A coin trading at $0.02 can be larger than one trading at $400, and usually the difference is nothing but how many units exist.
The mistake worth avoiding is reading market cap as money invested or as money that could be withdrawn. It is an arithmetic product, not a measurement of flows. Multiplying the last trade by every coin in existence assumes every coin could be sold at that price, which no market can support.
How it works
Two inputs. Price comes from a volume-weighted average across the exchanges a data provider tracks. Circulating supply is the count of units the provider judges to be issued and not locked, which involves editorial decisions about team allocations, foundation holdings, and provably burned coins.
Because supply is a judgment, two providers can publish different market caps for the same asset on the same day. The supply figure is also the piece most often wrong for a newer token, where a large share of units sits in vesting contracts.
Fully diluted valuation runs the same multiplication against maximum supply instead of circulating supply. A wide gap between the two says that many units are still to arrive, which is what unlock schedules describe.
Example
Illustrative arithmetic on two hypothetical assets.
| Asset | Price | Circulating supply | Market cap |
|---|---|---|---|
| Coin A | $400.00 | 5,000,000 | $2,000,000,000 |
| Coin B | $0.02 | 400,000,000,000 | $8,000,000,000 |
Coin B costs two cents and is four times the size of Coin A. If Coin A also has 20,000,000 units still locked in vesting, its fully diluted valuation is $10 billion against a $2 billion market cap, and the difference is scheduled to arrive over time.
Why it matters when you buy
Market cap is the honest way to compare two assets, and it corrects the common instinct that a low unit price means an asset is cheap. It says nothing about whether you can trade the asset at size, which depth and spread measure instead. Pair the ranking on the market overview with the measured depth on the liquidity pages and the incoming supply on the unlock pressure ranking before treating a large cap as a liquid one.
Related terms
- circulating supply — the multiplier in the formula
- fdv — the same sum on maximum supply
- float — the share genuinely available to trade
- unlock — supply arriving on a schedule
- trading volume — what actually changed hands
- liquidity — whether size can be traded at all
Questions
Does market cap tell me how much money went into an asset?
No. It is price multiplied by supply at a single moment. A small amount of buying against a thin float can lift the headline figure by far more than the money that arrived.
Why do two sites show different market caps for the same coin?
They disagree on circulating supply. Deciding whether locked, foundation, or burned tokens count is a judgment call, and providers publish their own methodology for it.
Is a low price per coin a reason to buy?
Unit price carries no information about value. Two assets with identical market caps can differ by a factor of a million in price per unit purely because of how many units were issued.
Guides that use this term
- What Is a Memecoin, and Why Most Lose Their Value
A memecoin is a token whose price rests on attention rather than on revenue, a product, or a claim on any asset, and the structural reason most end up worthless is that attention is the only thing holding the price up and it always moves on to something else.