Marketcap (or market capitalization) is a key indicator for assessing the size and upside potential of a crypto project.
Here's why it's essential đđ»
đ What is Marketcap?
The #marketcap represents the total value of a cryptocurrency in circulation.
It is simply calculated by: Token price x Quantity in circulation
Example: If a token is worth $2 and there are 1 million tokens, then the marketcap is $2 million.
đđŒ Why is it important?
Marketcap helps measure the size of a crypto project.
A low market cap can indicate strong growth potential, if the project is obviously solid, while a high market cap often indicates some stability.
â ïž Be careful with the token price!
Many newbies get fooled, but a low price for a token does not necessarily mean high upside potential.
Marketcap is much more telling! It is not the price alone, but the combination of price and total quantity in circulation that matters.
You often hear beginners say: âIf SHIBA goes to $1, Iâm a multi-millionaire!â
Yes, but no⊠â
A SHIBA at $1 means a marketcap of $589,258,111,457,671 ($1 x number of SHIBA in circulation), or nearly 434x the marketcap of BitcoinâŠ
âïž The different types of marketcap
1ïžâŁ Bigcaps (>$10 billion)
2ïžâŁ Midcaps ($1-10 billion)
3ïžâŁ Lowcaps ($50 million -$1 billion)
4ïžâŁ Microcaps (<$50 million)
đ„ Marketcap is essential to judge the capitalization of a project as well as the growth potential of its crypto.
This way you can find undervalued projects to speculate on.
But this is obviously not an indicator that allows us to judge the fundamental quality of a project, the innovation provided, the developers involved, the loyalty of a community, etc. So many factors on which the potential for growth also depends â ïž
Check out our full article for a more in-depth analysis of marketcap and its usefulness đđ»
CoinmarketCap.com
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