Understanding Market Capitalization in Cryptocurrency
What is Market Cap in Crypto?
Market capitalization, or market cap, is a way to measure the total value of a cryptocurrency. A larger market cap usually means a cryptocurrency is more important and popular. This is why market cap is used to rank cryptocurrencies.
Currently, Bitcoin (BTC) has the largest market cap, making it the top-ranked cryptocurrency. So, how is market cap calculated? You find the market cap by multiplying the number of tokens in circulation by the current price of one token.
Besides market cap, another measure often used to value a cryptocurrency is Fully Diluted Volume (FDV). FDV helps estimate the capitalization of crypto assets by taking into account all tokens that will eventually be in circulation in the market.
The main difference between market cap and FDV is how they measure potential value. Market cap shows the real-time, current value of a cryptocurrency. FDV, on the other hand, shows the future value of a cryptocurrency once all its tokens are released into the market. It’s important to remember that some cryptocurrencies have a schedule for releasing tokens over time. However, FDV doesn’t consider how much demand there will be for the cryptocurrency.
How to Calculate Market Cap?
To calculate a crypto market cap, you simply multiply its current price by the number of tokens currently in circulation. For example, if BTC’s price is $105,103 and there are 19.87 million BTC tokens circulating, its market cap would be $2.09 billion.
To calculate FDV, you multiply the current token price by the maximum supply of that cryptocurrency. For instance, if BTC has a maximum supply of 21 million BTC and its price is $105,103, its FDV would be $2.21 billion.
However, investors usually don’t need to do these calculations by hand. Most cryptocurrency trading platforms will show you the market cap and FDV for each crypto currency. Also, websites like CoinMarketCap and CoinGecko provide this information.
Crypto Market Cap Categories
Cryptocurrency are generally divided into these market cap groups:
- Large Cap
Large cap is a cryptocurrencies with a market cap above $10 billion. Because they have such a large market cap, these cryptocurrencies are usually well-known. They are also seen as having lower risk because they are very liquid and have a proven history.
As of June 4, 2025, there are 12 cryptocurrencies with a market cap above $10 billion. Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Ripple (XRP), and BNB (BNB) are currently the top five.
- Mid Cap
Mid cap is a cryptocurrencies with a market cap between $1 billion and $10 billion. These are often cryptocurrencies that have recently become popular within the crypto community but might not be widely known to the general public yet.
Mid-cap cryptocurrencies can see bigger price gains than large-cap ones during a market uptrend. However, they can also experience larger price drops during a market downturn. As of June 4, 2025, there are 61 cryptocurrencies within this group.
- Low Cap
Low cap is a cryptocurrencies with a market cap below $1 billion. This group carries the highest risk because their prices can change very quickly. Low-cap cryptocurrencies also have a higher chance of failing to develop.
If you can find a promising low-cap cryptocurrency, its price could go up a lot. However, because of the high risks, choosing cryptocurrencies in this category is challenging. There isn’t a fixed number for how many cryptocurrencies are in this group, as new ones are always appearing.
Using Market Cap as an Indicator
Simply put, market cap can help you understand the possible returns and risks of a cryptocurrency. Generally, the larger a cryptocurrency market cap, the less its potential for big returns. Meanwhile, the smaller a cryptocurrency market cap, the greater its potential for big returns. However, the risk and the volatility work the opposite way. Smaller market caps mean higher risk and more price swings.
Investors who want to take less risk usually pick cryptocurrencies with a large market cap. On the other hand, investors who are okay with more risk and are looking for bigger potential gains often put some of their money into mid-cap or even low-cap cryptocurrencies.
Market capitalization helps investors compare the value of different cryptocurrencies. This comparison can be useful for judging potential and risk. However, market cap shouldn’t be the only thing you look at when making decisions. You also need to consider market changes, the project fundamentals, overall market trends, and other factors to make smarter investment choices.