Cryptocurrency Market Capitalization
According to Coinmarket Cap, as at October 24, 2018, the total market capitalization for cryptocurrencies stood at a value of $210,836,082,201.
That’s a staggering figure considering that cryptocurrency trading is still a fairly new preoccupation for many.
Nevertheless, the industry continues to grow by leaps and bounds with bitcoin still outranking all other forms of cryptocurrency in terms of both market capitalization as well as price. Of the total cryptocurrency market capitalization of over $210 billion, bitcoin accounts for more than 50% of that, at a whopping market capitalization of $113,012,990,055.
While many focus on cryptocurrency price, it is more useful to focus on cryptocurrency market value and capitalization. This is because the price of cryptocurrencies varies with factors such as government policies, economic conditions, and even investor psychology and behavior.
Value, on the other hand, is more enduring and gives a truer reflection of the worth of one particular cryptocurrency in relation to another. Cryptocurrency capitalization is similar to stock market capitalization and is found by using the following formula:
Cryptocurrency Market Capitalization = Total current coins or tokens x current price
Therefore, if you need to determine the market capitalization of bitcoin, for example, you would need to multiply the number of bitcoins currently in circulation by the current price of bitcoin. The same process would be completed to arrive at the market capitalization for every type of cryptocurrency.
Cryptocurrency market capitalization is useful for helping investors to determine the investment risk involved with a particular cryptocurrency. This is similar to determining risk on the stock market. In general, large cap companies present less investment risk than mid cap and small cap companies.
Likewise, cryptocurrencies when grouped according to different factors, reflect a level of investment risk. One factor that may be used to group cryptocurrencies is cryptocurrency market sector.
Bitcoin is considered a large cap cryptocurrency based on the value, whereas, another cryptocurrency such as Funfair (market cap of $70,889,733 as at October 24, 2018) is considered a small cap cryptocurrency.
Large cap cryptocurrencies have a great current value and currently promise more attractive returns. On the other hand, mid and small cap cryptocurrencies, have lots of potential for future growth. This means that it is possible for them to reach a point where their value increases by many times the current value.
Currently, the top 10 cryptocurrencies in terms of market capitalization in descending order are Bitcoin, Ethereum, XRP, Bitcoin Cash, EOS, Stellar, Litecoin, Tether, Cardano and Monero. Monero currently has a market capitalization of $1,781,310,904.
Small cap cryptocurrencies are subject to what is known as market manipulation. There are some investors who control so much of the market supply of a particular cryptocurrency, that they have the power to influence the price of that cryptocurrency.
Of course, these large price movements affect investor behavior and encourage increased investment. However, these huge swings in price do not give a true reflection of the real value of a cryptocurrency.