What is Cryptocurrency Market Cap?

This concept, also known as market capitalization, is defined as the current market value of a cryptocurrency network. It is calculated by multiplying the circulating supply of a crypto asset and its price per unit. This is why market cap provides a better estimate of the value of a network than the price of a single unit.

What is the Total Cryptocurrency Market Cap?

Total crypto market cap; It shows the total value of Bitcoin, altcoins, stablecoins, tokens and all other crypto assets in the market. This metric is considered important by many as it indicates the size of the industry in general.

Due to the high volatility of the cryptocurrency markets, values ​​tend to change frequently. In the six and a half years since the cryptocurrency's emergence, its total market cap has never exceeded $20 billion. Since the last peak of 770 billion USD in 2018, there have been fluctuations of hundreds of billions of dollars.

Why Total Crypto Market Cap Matters?

Total crypto market cap is often used as a basis for benchmarking against other sectors across the economy. For example, many analysts frequently compare the total crypto market cap to the value of stock or commodity markets.

The purpose of doing this is to reach an approximate estimate of how much the total crypto market can grow in the coming years or decades. However, no one knows yet what the best way to estimate the value of cryptocurrencies and blockchain projects is. These comparisons can be helpful, but don't rely on results alone.

Comparing different financial markets is often considered a waste of effort. Different sectors can attract different types of investors. Cryptocurrency; It will not directly attract the attention of those who trade in stocks, foreign exchange or commodities. Cryptocurrencies are a new and emerging asset class and it is necessary to evaluate them as such.

Why Total Crypto Market Cap Can Be Misleading?

Making decisions based on the total crypto market cap can be misleading for many different reasons. The first thing to do is to determine the correct market value of each project. To arrive at this value, it is multiplied by the quantity supplied and the price per asset. But determining the right supply information can be difficult. Because if this data is not correct, then all other calculations will be invalid.

Second, it may be possible to manipulate the market value of some projects. Some projects do this to create a false perception of security and value. In fact, looking at the total market value without knowing what it means can cause financial decisions to be made that can bring harm.

Finally, we can say that the total market cap is actually just a number representing a particular situation over time. What may be nine digits today, could be ten digits next week and eight in 6 months. This number just gives a snapshot of the cryptocurrency industry at that time.

Crypto market cap is one of the most important metrics to watch. It shows the rise and fall in the valuation of the entire cryptocurrency industry. It is also helpful to consider the difference between current value and what the diluted market value might be in the future. It is also very important to evaluate other criteria. Market capitalization is only one piece of the puzzle, and it's important to remember that there are other elements of the industry that need to be investigated before making any financial investment.