Crypto Market Capitalization, Supply, and Relative Valuation
Summary
The document explains market capitalization as a way to compare the overall value of crypto projects. It defines the calculation as coin price multiplied by circulating supply and uses two hypothetical coins to show why a lower unit price does not necessarily mean a coin is cheaper relative to the market. It also outlines large-, mid-, and small-cap groupings and describes total market capitalization and fully diluted valuation (FDV) as related measures.
The guide suggests using market cap rather than token price alone when comparing projects, and it presents large-cap assets as generally less risky than smaller ones. Its examples and categories are introductory rather than a valuation method: market cap does not establish a project's quality, future returns, or actual stability. Supply definitions and stated thresholds are simplified, and the document provides no empirical analysis or trading rules.
Key ideas
- Market capitalization is calculated by multiplying a coin’s current price by its circulating supply.
- A token’s low unit price does not by itself indicate that it is undervalued.
- The document groups cryptocurrencies into large-, mid-, and small-cap categories with different general risk profiles.
- Fully diluted valuation estimates market capitalization if the total supply were circulating.
- Market cap is a comparison measure, not a guarantee of project quality or future performance.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.