Some believe that cryptocurrencies are the future. For these individuals, gaining information about these currencies is of utmost importance. So if you are one among them, you are clearly in the right place because we are about to take you on an educational trip where we teach you all about market capitalization for cryptocurrency.

So grab a notebook and read the following like a good kid. 

Understanding Market Capitalization 

Market capitalization, commonly known as market cap, refers to the total market value of all the shares of a company’s stock. So in the context of cryptocurrency, the market cap would refer to the complete value of all the coins that have been mined.

It’s derived by multiplying the total number of coins by the price of a single coin. For example, if the current number of coins in the market stands at a figure of 16 million, you can calculate the market cap by taking into account the price of Bitcoin, which can be at € 35,000.

€ 35,000 x 16 million = 560 billion 

This rough estimate indicates the market capitalization of Bitcoin and bringing in the price of other cryptocurrencies will help you explore the market cap of the same. It aims to provide a rough idea of how stable an asset is, which makes it ideal to be used on every market. As the figures come out, you can also use them to bring about comparisons and draw conclusions.

With cryptocurrency being a widely accepted form of payment, especially at online casino brands like Winissimo, it is quite important to understand everything that revolves around the same. 

Benefits of Calculating Market Capitalization 

The simple figures of market capitalization have a lot to indicate and it is quite essential to know how it benefits you. 

• Helps you understand the real value

When it comes to investments, a lot needs to be understood and one of them is market capitalization. For example, if Bitcoin has 200,000 coins worth €2 in circulation while Ethereum has 500,000 coins worth € 1 in circulation, then the market cap of both these cryptocurrencies are 400,000 and 500,000 respectively.

This clearly indicates that despite Bitcoin having a higher price than Ethereum, it is Ethereum that has the most value. Such figures are certain factors that you need to consider while investing.

• Opens the door for comparisons 

As the above example states, market cap can be used as a tool to make comparisons and then make informed decisions. While we might assume that one currency is performing better than the other, we need to understand the real value before going ahead to make investments.

So compare the value of cryptocurrencies and then make informed decisions in order to limit the kind of risks that come with finances. 

• Leads to classifications 

The market cap also brings in classifications and divides the market of cryptocurrency. From large-cap to small-cap cryptocurrencies, the classifications are out to be seen. While large-cap cryptocurrencies have higher liquidity, mid-cap cryptocurrencies involve higher risk and small-cap cryptocurrencies are known to have drastic changes.

Large-cap cryptocurrencies highlight market caps of more than € 10 billion, mid-cap stay between € 1billion – € 10 billion and small-cap cryptocurrencies have a market cap of less than € 1 billion.

• Minimises risk

While it is obvious that market caps help reduce risks, it is still important to mention the same. This added benefit that comes from market caps should not be ignored and should always be considered an important aspect. 

So understand the different figures that appear as market caps and make good use of the same.

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