Beginner guide

What is market cap?

Market cap = price × circulating supply (the number of coins currently in circulation).

Why price alone misleads

A coin priced at $0.50 isn't "cheaper" than one at $50 in any useful sense. If the $0.50 coin has 100 billion coins in circulation, its market cap is $50 billion. If the $50 coin has 10 million coins, its market cap is $500 million. The first is 100 times bigger. A low price per coin usually just means there are lots of coins.

Using market cap

• Ranking: sites like CoinGecko sort coins by market cap. Bitcoin is #1.
• Risk: smaller-cap coins tend to swing much more in price, both up and down.
• Reality check: before believing a coin will "reach $1,000", multiply that by its supply. The resulting market cap is often unrealistic.

Caveats

Market cap isn't money that's actually been invested, and it can't all be cashed out at that value. Also watch the difference between circulating supply and fully diluted valuation (FDV), which counts coins that will be released in the future. Those can add selling pressure later.

Not financial advice.