Within the blockchain industry, Cryptocurrency Market Capitalization or Crypto Market Cap refers to a metric that measures the real value of a cryptocurrency or digital asset.
Read this article to get answers of the following FAQ?
- What is the definition of market cap in cryptocurrency market?
- Why is market cap important in crypto?
- How much is the crypto market worth?
- How do you calculate market cap of cryptos?
- Is a high market cap of crypto good?
- Does market cap matter in cryptocurrency?
Cryptocurrency Market Capitalization
The total crypto market capitalization grew above 325% in the past one year (Feb 2020 – Feb 2021), as the digital coins became an increasingly popular investment tool in 2020. This was even above the market cap reached in 2017 – for many consumers, the break-out year for Bitcoin and its fellow-currencies. Bitcoin’s market cap makes up the majority of the overall market capitalization, around 62% as on Feb 6, 2021.
What Is Market Cap? Stock Market Cap vs Crypto Market Cap
Market capitalization, commonly called market cap, is a financial measure commonly used for publicly traded companies. Market capitalization is calculated by multiplying the share price by the number of outstanding shares. However, cryptocurrency analysts calculate it as the price of the virtual currencies multiplied by the number of coins in the market. This gives cryptocurrency investors an idea of the overall market size, and watching the evolution of the measure tells how much money is flowing in or out of each cryptocurrency.
Cryptocurrency As An Investment
Cryptocurrency market is highly volatile and does not provide any guarantee on investment. There are high chances that investors can lose all their money. However, several cryptos have given exponential returns which the traditional investments can never match. This was the primary reason for retail investors getting attracted to the crypto market. But, the scenario has changed with growing popularity of blockchain applications across different verticals, involvement of industries to adopt blockchain for solving their business problems and for future growth. Moreover, the approach taken by governments to view blockchain and crypto as part of the system and revisiting the financial policy and regulation to incorporate blockchain and crypto has further boosted confidence in the crypto market.
Led by bitcoin, cryptocurrencies are gaining traction with more mainstream investors. The euphoria boosted the total market value of all cryptocurrencies above $1 trillion for the first time in January 2021. The total market Capitalization of all cryptocurrencies reached $1.2 trillion for the first time on February 6, 2021.
Governments and centrals banks are in general apprehensive of cryptos and they have been warning investors on the risks associated with cryptos. In January 2021, a European Central Bank governing council member warned investors they may lose everything investing in bitcoin. Bitcoin investors need to be prepared to “lose all their money,” European Central Bank governing council member Gabriel Makhlouf said.
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