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The market capitalization of a cryptocurrency is the price of all coins issued and in circulation. Using only this indicator, it is impossible to accurately assess and predict the dynamics of the exchange rate and draw up a competent investment plan. Still, capitalization is an important indicator that you should pay attention to. We’ll tell you why.
Why should an investor know about the capitalization of assets?
Knowing what the market capitalization of a cryptocurrency means is necessary in order to protect your investment portfolio from depreciation and make the right decision when thinking about where to invest your money. In the cryptocurrency sphere, capitalization is the total value of a virtual coin, taking into account the current rate. This indicator allows you to understand what position the cryptocurrency occupies in the market, what growth potential it has, how high its volatility is, whether it is safe for investment.
In the classification of cryptocurrencies by popularity and prospects, capitalization is one of the main indicators. It is believed that the size of capitalization directly reflects the level of popularity of the coin. But it’s not always the case. For example, the capitalization of Ethereum is significantly lower than that of Bitcoin , although this coin is not much inferior to the market leader in popularity.
Savvy investors use the market capitalization of cryptocurrencies to compare assets. According to popular belief, investments in large-cap cryptocurrencies are less risky, since these coins have less volatility, they are more stable and more reliable for long-term investments.
Why is this indicator important?
Stocks, gold, fiat currencies, and other classic financial assets have value in their own right, while cryptocurrencies do not. The value of a crypt depends on supply and demand, it is not backed by real money or goods, and is not regulated by government agencies. The course of virtual assets is formed on the basis of market laws, it depends on the mood in the market, the activity of miners who mine coins, the presence of an asset in the listing of popular large exchanges.
Cryptocurrency capitalization depends on the number of coins put into circulation, it shows how much the asset is in demand among market participants. A large capitalization indicates the popularity of a cryptocurrency – it means that investors are actively investing in a coin. This indicator is especially important for beginners who are looking for a suitable asset for promising investments. In the first couple, while you have not yet figured out the intricacies of the market, you should choose coins with a large capitalization for investments, and it is better to invest in several coins in order to diversify your investment portfolio.
Cryptocurrency classification by capitalization
Based on the rating by cryptocurrency market capitalization , three groups of coins can be distinguished. The classification looks like this:
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Coins with high capitalization. These are all cryptocurrencies that have a market value above $10 billion. Such assets show significant growth over several years; investments in them are considered the safest and most reliable.
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Coins with medium capitalization. This group includes crypto, the market value of which ranges from 1 to 10 billion dollars. Such assets are called promising for investment and earnings.
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Coins with small capitalization. These are all coins with a market value of less than $1 billion. Assets with a low capitalization are considered less predictable, risky for investments, but they still have the potential for growth, in the future they can bring significant income to their owners.
TOP 10 cryptocurrencies by market capitalization
|
bitcoin |
$458,322,541,201 |
|
Ethereum |
$230,529,130,626 |
|
Tether |
$66,925,791,063 |
|
USD Coin |
$53,812,434,959 |
|
BNB |
$52,325,891,120 |
|
XRP |
$18,531,385,690 |
|
Cardano |
$18,011,476,329 |
|
Binance USD |
$17,824,457,849 |
|
Solana |
$15,122,607,115 |
|
Polkadot |
$10,246,670,063 |
Cryptocurrency market capitalization is far from the only indicator that needs to be taken into account when analyzing coins and studying the market. In order to invest profitably and increase the chances of earning, it is worth studying, understanding the mechanisms of the market, mastering technical and fundamental analysis. You can get the necessary knowledge and skills in Crypto Crew . Our team has developed a cryptocurrency earning training course and created one of the largest and most popular crypto community in Ukraine. Become a part of the team and start earning on crypto right now!
Author: admin_cryptocrew
