What is Crypto Market Capitalization?(1)
2021.06.21 07:12
Hi It's Unicorn
What is crypto market capitalization? The market cap is the total value of a certain cryptocurrency in the market. The "cryptocurrency unit price" multiplied by the " circulating supply in the market” is market cap. This concept can be applied to the stock market, and can be used as an estimation of the market concentration rate.
Source : coinmarketcap.com
The market cap of Bitcoin is nearly 45% of the total market cap! The second-ranked Ethereum is about 17%, which is 1/3 of Bitcoin. The top two Bitcoin and Ethereum is more than 50% of the total market cap of cryptocurrencies industry, which means that the cryptocurrency market concentration rate is higher than stock market.
Due to the developing time of cryptocurrency is much shorter than stock market, most people only impressed on Bitcoin, the first cryptocurrency, they will naturally start to invest it. It’s similar to the stock market of some developing countries. Some large companies or government-backed companies grow faster, so the market cap of stock market in these countries is very concentrated on the top stocks.
On the other hand, there is another reason why the market cap of Bitcoin is so prominent. In circulation of crypto transaction, the price of other cryptocurrencies is often based on Bitcoin, just like US dollar, an international currency. Gold is also priced at U.S. dollars. It means that people recognized the value standard of base currency so Bitcoin is so prominent.
The two major aspects that affect the market cap.
The price is depended on the competitiveness of the currency's actual application, and who holds the cryptocurrency (means large traders) , News, marketing methods, social influence, etc.
The total number of circulation is determined by the initial issuance method specified in the white paper of the currency.
Market cap = circulating supply × price
Let’s see the top ten cryptocurrencies with the largest market capitalization in Jun. 2021:
Source : coinmarketcap.com
Their market cap of Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are 645.3 billion U.S. dollars, 248.4 billion U.S. dollars, and 33.3 billion U.S. dollars, which are determined by the price multiplied by the total circulating supply. We can see that Bitcoin has the highest unit price of 34,045 U.S. dollars; The price of Ripple is only about 0.7218 US dollars, but the circulation number of Ripple is nearly 46 billion, which is about 2,400 times that of Bitcoin, so Ripple can be the 7th- ranked market cap in cryptocurrency industry.
