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Market capitalization, or market cap as it is commonly referred to, is the dollar value of all a company's stock. It can also refer to cryptocurrency too. In this instance, it refers to all of the coins that are in circulation. One way for you to look at the market cap would be for you to view it as a gauge, showing how stable the asset is likely to be. A cryptocurrency with a bigger market cap is way more likely to be a sound investment when compared to one that has a smaller market cap. Digital currencies with a small market cap are far more susceptible to the market's whims and can see huge gains.

Why is the cryptocurrency market cap relevant?

It's important to know that price is just one way to manage the value of a currency. Investors tend to use the market cap as a way for them to find the bigger story. It also helps them to compare the value across a lot of different currencies. When you look at key statistics, you will soon see that this can indicate the total growth potential of a currency and even if it is safe to buy when you compare it to others. It's important to know that a currency's market cap can swing, and very dramatically so. A lot of this comes down to the general volatility of the coin.

How to use the market cap value?

Market cap is great because it gives you the chance to compare the value of one currency with another. This comparison allows you to make way more informed decisions. Cryptocurrencies tend to be defined by their market cap in three ways.

  • Large-cap currencies, including Bitcoin, have more than $10 billion in their market cap. Investors see this as being a low-risk investment because it's shown that it has a vast track record for growth, and it also has a much higher level of liquidity. This means that it can withstand more people cashing out before the price is impacted significantly.
  • Mid-range currencies tend to cap between $1 billion and $10 billion. They have more risk, but at the same time, they can come with more untapped potential.
  • Finally, you have small-cap currencies. This is anything that is worth under $1 billion, and it's the most susceptible to risks based on the current state of the market.

Market cap is very useful if you want to compare the value of your currency, and it also gives you the chance to see the market trends. It's a key point when it comes to the stability and sustainability of the currency, and it helps you to know if it is a good investment.

Want to find out more about cryptocurrency, market caps, and anything else? Why not get in touch with us today at Unblocktalent. When you do, you can then count on us to work with you to give you the knowledge you need to make the best decisions.

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