Coin market cryptocurrency capitalization is one of the main factors to consider when picking an asset for investment. This indicator shows how much the asset is valued by investors and how dominant it is among competitors. The main components of the market cap are the crypto price and the number of coins in circulation. To receive the market cap indicator, you should multiply the price for one coin by the general number of such coins that are put in circulation. You should not confide it with the total supply. When the total supply of the coins globally is multiplied by the current price for one coin, it is called a fully diluted capitalization.
All crypto assets can be divided into the following groups:
- Mega cap coins (of course, the market leaders belong to this category).
- Large cap
- Middle
- Small.
The higher the indicator of capitalization, the more resistant the asset it toward different market trends and fluctuations. That means mega and large cap coins demonstrate the most stable growth in the long-term perspective. On the other hand, middle-cap assets are also worth attention. They are more volatile and sharply react to every slight market trend change, but that means that they can grow faster and easier when the market moves up. That is the reason why investors recommend buying both mega and middle-cap coins.
What Affects Capitalization?
Capitalization depends on the assets’ supply and value. If the supply is limited, it increases the demand for the asset; thus, the asset is more valuable. If the supply is unlimited, demand is usually lower, which means lower value, but the asset can still have a large or middle cap. When picking digital assets, better pay attention to large and mid-cap assets with limited supply.
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