What is Market Cap?
Crypto Glossary Definition
The price of a coin multiplied by the circulating supply of that coin.
Why Market Cap Matters
Market cap (price × circulating supply) is a more honest way to compare projects than price alone — a coin priced at \$0.01 isn't automatically "cheaper" or more likely to grow than one priced at \$100. A low price with an enormous supply can still carry a massive market cap.
Market Cap in Practice
Two newly listed tokens catch an investor's eye on the same day. Token A trades at $0.02 with 500 billion coins in circulation. Token B trades at $150 with only 10 million coins circulating. At first glance, Token A looks like the obvious bargain — surely a coin worth two cents has more room to grow than one already priced at $150? But multiplying price by circulating supply tells a different story: Token A's market cap is $10 billion, while Token B's is just $1.5 billion. By this measure, Token B is actually the smaller, potentially higher-growth asset, while Token A would need an enormous amount of fresh capital flowing in just to double, since it's already valued on par with a mid-sized public company. The investor uses this comparison to sanity-check marketing claims from a project promising their sub-cent token is "cheap" — after checking the supply figures, she realizes the project's fully diluted valuation is actually larger than several established blue-chip coins. This is a common trap for newcomers to crypto: assuming a low unit price automatically means an asset is undervalued or has more upside, when in reality it's the total market capitalization, not the sticker price, that reflects how the market values the entire project.
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