Definition
Market cap, short for market capitalization, is a basic measure of how large or valuable a cryptocurrency is in monetary terms. It is found by multiplying the current market price of one unit of the asset by its circulating supply, meaning the number of coins or tokens that are currently available and trading. In crypto, market cap is often used to compare the relative size and importance of different assets, from major networks like Bitcoin to smaller altcoin projects.
As a concept, market cap focuses only on the value of the coins or tokens that are already in circulation, not the maximum possible supply. It is closely related to tokenomics, because issuance schedules, unlocks, and supply design all influence circulating supply and therefore the reported market cap. Market cap is different from FDV, which attempts to estimate the value of a project if its full supply were already in the market.
Context and Usage
In decentralized finance and the broader crypto market, market cap is commonly used as a quick reference for the scale of a project. Higher market cap assets are often viewed as more established, while lower market cap assets are often considered smaller or more speculative altcoins. For example, Bitcoin typically has one of the largest market caps in the industry, which is part of why it is treated as a benchmark asset.
Because market cap depends on both price and circulating supply, changes in either input can significantly alter the figure. Differences between market cap and FDV can highlight how much of a token’s supply is still locked or not yet circulating. As a result, understanding market cap alongside circulating supply and broader tokenomics helps frame how a crypto asset sits within the overall market.