There are a couple of different ways to calculate a cryptocurrency’s market capitalization. The first way is to multiply the current circulating supply of a given cryptocurrency by its fully diluted supply. This calculation is useful when a certain cryptocurrency is dormant or hasn’t been trading for several years. You should also know the size of the circulating supply of a specific coin before using it. These factors can all influence the value of a cryptocurrency.
A crypto’s market capitalization can help novice investors avoid some common pitfalls. Although many crypto influencers promote a certain cryptocurrency, the market cap is a reliable piece of information. Investing in cryptocurrencies is not for everyone, and you should only invest what you can afford to lose. A good rule of thumb is to invest in cryptocurrencies with a market cap over the last year. In addition to market cap, you can also use the market capitalization of a coin to analyze its future value.
Cryptocurrency market cap provides investors with a convenient way to compare cryptocurrencies. For example, a cryptocurrency’s price may be $600 a share. While Cryptocurrency B may be worth only six cents, it has a much higher market capitalization than Cryptocurrency A. This is because the coins in circulation of Cryptocurrency A are only one million, while those in circulation of Cryptocurrency B are over 150 million. The higher market cap means the cryptocurrency has a higher market value.
The total cryptocurrency market cap hit an all-time high in November of last year. Since then, however, it has been dropping steadily. A ban in China caused the market cap to plummet by almost 40% in one month, and the taxation of cryptos in the US and India has contributed to the price decline. In the near future, the total market cap will reach $1-2 trillion. But for now, the market cap will remain volatile until the price of Bitcoin recovers to the previous record.
A cryptocurrency’s market cap can indicate its price, which influences the number of coins in circulation. Using the market cap, investors can get a better idea of the future price of a cryptocurrency and its potential for growth. This information is extremely valuable in determining investment decisions. If you want to invest in a crypto, keep these three basic factors in mind. Then, you can move on to other investments. Just remember that if a cryptocurrency has a high market cap, it means it has a lot of potential.
Despite the fact that cryptocurrencies are notoriously volatile, they do present the highest risk for investors and provide unparalleled opportunities for gains. With the soaring demand, the cryptocurrency market is likely to continue to increase in value. But, the question remains: what is the real value of this space? Fortunately, we can use the Dotcom bubble as a guide for predicting future market value. That’s the long-term goal for the crypto space.