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Market Cap — What Does It Mean in Crypto?

Crypto Glossary by ChangeHero
Author: Catherine
Created:
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When people say "Bitcoin is bigger than Ethereum," what exactly are they comparing? Usually market cap – the total value of all tokens in circulation calculated by multiplying the current price by the circulating supply. It's crypto's way of measuring which projects have captured the most value, though like many crypto metrics, it's more complicated than it first appears.

Market cap gives you a quick snapshot of a project's relative size and investor confidence. Bitcoin's trillion-dollar market cap reflects its position as digital gold, while smaller projects with million-dollar market caps are still proving their worth. It's useful for comparing projects and understanding the hierarchy of crypto adoption.

But here's where market cap gets tricky in crypto: the numbers can be misleading. A token with low liquidity might show a massive market cap if someone pays a high price for a small amount, even though you couldn't actually sell significant holdings at that price. Plus, market cap doesn't account for locked tokens, lost coins, or the reality that not all "circulating" supply is actually available for trading.

When Do You Use Market Cap?

You'll encounter market cap discussions when crypto enthusiasts are:

  • Comparing the relative size and success of different cryptocurrencies
  • Analyzing whether a token is overvalued or undervalued
  • Discussing crypto rankings and which projects dominate the space
  • Evaluating investment opportunities and potential upside

The term appears constantly in crypto conversations, from casual "Bitcoin vs. Ethereum" debates to serious investment analysis. You'll see it in market roundups, project comparisons, and whenever people try to contextualize crypto's place in the broader financial world.

How to Use Market Cap in a Sentence

Here's how market cap typically appears in crypto discussions:

  • "Ethereum's market cap is still only half of Bitcoin's despite all the DeFi activity."
  • "This altcoin needs a $10 billion market cap to reach my price target."
  • "Market cap rankings don't tell the whole story about project quality."
  • "I focus on projects with solid fundamentals, not just large market caps."

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Tags:

  • crypto-glossary
  • crypto-basics