What's that MarketCap? This is the Measure of Strength in the Crypto Ecosystem

Bittime – MarketCap is one of the most fundamental metrics in the world of investment, including in the crypto market. This is a number that shows the total market value of an asset, in this case, a cryptocurrency.

What is MarketCap?

MarketCap is a term used to measure the total market value of an asset. In the context of crypto, MarketCap shows the total value of all coins circulating on the market.

The way to calculate MarketCap is quite simple, namely by multiplying the total number of coins in circulation by the price of one coin at a certain time. For example, if a crypto has 10 million coins in circulation at a price of IDR 10,000 per coin, then its MarketCap is IDR 100 billion.

MarketCap is often used as an indicator of the size and strength of a crypto asset. However, it is important to remember that MarketCap does not always reflect the intrinsic value of an asset, as it can be influenced by factors such as speculation and market sentiment.

Does MarketCap Matter?

MarketCap is an important metric in the crypto world for several reasons. First, MarketCap can provide a general idea of ​​the size and influence of a cryptocurrency in the market. Cryptos with large MarketCap tend to be more stable and have higher liquidity.

Second, MarketCap can be used to compare different cryptocurrencies. By looking at MarketCap, investors can identify cryptocurrencies with higher growth potential.

However, it is important to not only look at MarketCap, but also consider other factors such as technology, development team, and use case.

Finally, MarketCap can provide an indication of the development stage of a cryptocurrency. Cryptos with a large MarketCap are generally at a more mature stage, while cryptos with a small MarketCap may still be in the early stages of development.

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Types of MarketCap

There are several types of MarketCap used to classify crypto, namely:

1. Small-Cap Cryptocurrency

Cryptocurrencies with a small MarketCap, generally under $1 billion, are referred to as small-cap cryptocurrencies. This type of crypto tends to have high volatility but also offers the potential for large profits.

Because they are still in the early stages of development, the risks of investing in small-cap cryptocurrencies tend to be higher.

2. Mid-Cap Cryptocurrency

With a MarketCap between $1 billion to $10 billion, this cryptocurrency is in the mid-cap category. Mid-cap cryptocurrencies have generally passed the initial stages of development and have a wider user base.

The investment risk tends to be lower than small-cap, but the potential profit is also not as big as small-cap.

3. Large-Cap Cryptocurrency

Cryptos with a MarketCap above $10 billion fall into the large-cap category. These cryptos generally have better price stability and high liquidity. However, the price growth potential may be more limited compared to small-cap or mid-cap cryptocurrencies.

It is important to remember that these classifications are dynamic and may change over time based on market developments.

How to Calculate MarketCap

To calculate the MarketCap of a cryptocurrency, you need to know two pieces of information: the total number of coins in circulation and the price of one coin.

Example:

Bitcoin has around 19 million coins in circulation.

If the price of Bitcoin is IDR 1 billion per coin, then Bitcoin's MarketCap is 19 million coins x IDR 1 billion/coin = IDR 19,000 trillion.

By knowing how to calculate MarketCap, you can obtain important information about the size and position of a cryptocurrency in the market. However, it is important to use these metrics in conjunction with other analyzes to get a complete picture of a crypto asset.

MarketCap Relationship with Crypto Prices

MarketCap not just a number, but also has a significant influence on the price of crypto.

1. MarketCap as a Demand Indicator

MarketCap indirectly reflects market demand for a crypto. The higher the MarketCap, generally indicates the greater investor interest in the crypto.

However, keep in mind that an increase in MarketCap can be caused by an increase in the price per coin or an increase in the number of coins in circulation.

2. Influence of MarketCap on Volatility

Crypto with a large MarketCap tends to have lower volatility compared to crypto with a small MarketCap. This is because there are more investors involved, so price changes are not too extreme.

3. MarketCap and Liquidity

MarketCap It is also related to the liquidity of a crypto. Cryptos with a large MarketCap generally have higher liquidity, meaning it is easier to buy or sell large amounts without significantly affecting the price.

Read Also: Tokenizing US T-Bills on the XRP Ledger: Everything You Need to Know

Conclusion

MarketCap is one of the important factors that needs to be considered in crypto analysis. While not the only indicator, MarketCap can provide a general idea of ​​the size, demand, volatility and liquidity of a cryptocurrency.

How to Buy Crypto on Bittime

You can buy and sell crypto assets easily and safely via Bittime. Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti. 

To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. Apart from that, also ensure you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application. Study Complete Guide How to Buy Crypto on Bittime. 

Monitor graphic movement of Bitcoin (BTC) price, Ethereum (ETH), Solana (SOL), and other cryptos to find out today's crypto market trends in real-time on Bittime.