Market Capitalization

In the crypto space, market capitalization is an important factor that determines the price action of any asset. However, what is a market cap in cryptocurrency? Market Capitalization or commonly known as market cap is the total value of the crypto asset in US dollars. It is the total value of all the crypto tokens of the particular blockchain network in the market. In the case of crypto assets, the market cap is usually calculated by multiplying the total number of tokens with the price of a single crypto token at any particular time.

The market capitalization of a crypto asset also determines how stable the asset is or how strongly it can resist a market fluctuation. Just as a big ship can navigate through the high tides in a more stable fashion, crypto assets with high market caps are more likely to withstand the market fluctuations. The high market cap of an asset also denotes the trust of investors in a certain crypto asset. The ones with higher market caps are considered to be more stable investments than the ones with smaller market caps. Investors often use the market cap as one of the metrics to determine the growth potential of a crypto asset and whether it is a safe buy or not as compared to thousands of other crypto tokens present in the market.