Definition
Market capitalization, or "market cap," is the total market value of a cryptocurrency at a given moment. It is calculated with a simple formula: market cap equals the current price per unit multiplied by the circulating supply. For Bitcoin, that means the spot price multiplied by the number of coins that have been mined and are in circulation. Market cap is widely used as a rough measure of a network's relative size.
What it does and does not tell you
Market cap is useful for comparing the scale of different assets, but it has well-known limitations. It does not represent the amount of money that has flowed into an asset, nor the amount that could be withdrawn, because price reflects only the most recent trades at the margin. A thinly traded asset can show a large market cap while having little real liquidity, meaning large orders would move the price sharply.
Circulating versus total supply
Definitions of supply matter. Circulating supply counts units publicly available to trade, while total or fully diluted supply may include coins not yet issued. Using a different supply figure changes the market cap, so it is important to know which measure a data source applies. Bitcoin's capped issuance of 21 million coins gives its fully diluted figure a fixed upper bound.
Market cap is often used to distinguish Bitcoin from the broader field of altcoins and is one input some observers watch alongside whale activity. This entry is educational and not financial advice.
In Simple Terms
Market capitalization, or “market cap,” is the total market value of a cryptocurrency at a given moment. It is calculated with a simple formula: market…