Technical Definition

Market Cap

The current price of a token multiplied by its circulating supply.

By Crypto University Editorial
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✦ Key Insight

It tells you roughly what size bracket you are trading and how much new money a price move would require.

✕ Common Misconceptions

Thinking a low unit price means a token is "cheap". Also ignoring fully diluted valuation, which can be several times higher if most supply is still locked.

Detailed Explanation

Market cap estimates what the tradeable portion of a project is collectively worth. It is a better size comparison than price alone, because a low unit price says nothing about scale. It ignores tokens that are locked or not yet issued.

In Practice

“A token at $0.001 with 100 billion circulating has a $100 million market cap — larger than a token at $50 with 1 million circulating.”

Dig Deeper

Wallet

Software or hardware that stores your private keys and lets you sign transactions.

Token

An asset created by a smart contract on an existing blockchain rather than being that blockchain's native currency.

Blockchain

A shared, append-only record of transactions maintained by many independent computers at once.

Transaction

A blockchain transaction is a signed or authorized instruction that changes blockchain state or transfers value when accepted by the network.