KEYTAKEAWAYS
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Market Capitalization Basics: Market cap represents the total market value of a company's shares or cryptocurrency and is calculated by multiplying the price by the circulating supply.
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Significance of Market Cap: Investors monitor market cap to gauge a company's size, compare with peers, and strategize investments, important for assessing potential growth and market stability.
- Top 5 Cryptocurrencies by Market Cap (2024): Bitcoin leads as the highest-valued crypto, followed by Ethereum, Tether, BNB, and Solana, each influential due to unique attributes and market positions.
CONTENT
Explore market cap: a key financial metric reflecting the total market value of a company’s shares or crypto assets. CoinRank also discusses the top 5 cryptos by market cap in the article.
WHAT IS MARKET CAP?
You may often read the word “market capitalization” (often abbreviated as “market cap”) in the financial news. It denotes the market value of a financial product or asset and essentially represents the total cost required to purchase that product or asset in the market.
Market cap is most commonly associated with stock markets, where it is used to estimate the valuation of a company. Commonly seen in news headlines, statements like “Google’s market cap has exceeded $2 trillion” or “Tesla’s market cap has bounced back to $584.4 billion” revolve around this concept.
The same principle applies to cryptos, which are becoming a frequent topic of discussion as they gain more mainstream acceptance. This article will explore the importance of market cap, methods for its calculation, and the factors that affect it, concluding with a list of the top 5 cryptos by market cap for reference.
HOW DO YOU CALCULATE MARKET CAP?
Typically, a company’s market cap is calculated by multiplying the total value of its publicly traded shares by the current market price of the share. In the case of cryptos, the calculation correlates the price per currency unit with the total number of circulating digital tokens.
WHAT AFFECTS MARKET CAP?
Based on the calculation formula in the section above, the main factors influencing market cap are the price and circulation of the product (stock). For cryptos, if there is bullish market news or a surge in demand that drives the price of crypto up, its market cap will increase, provided the circulation remains unchanged.
Conversely, if the total circulating supply of a crypto increases while the price remains stable, its market cap will also rise.
WHY IS MARKET CAP IMPORTANT?
One might wonder why investors consistently monitor market caps. The market cap serves as a key indicator for investors to gauge the scale of an investment target within the market and to compare it with competitors in the same industry to strategize their investments accordingly.
For example, in the U.S. stock market, companies are categorized by size: “large-cap” stocks are valued over $10 billion, “mid-cap” stocks between $2 billion and $10 billion, and “small-cap” stocks between $300 million and $2 billion. Investors use these classifications to guide their investment allocations.
Similarly, in the crypto market, investors can assess crypto by market cap to find out the investment potential and market sentiment towards it, which can also indicate potential future trends.
CRYPTO BY MARKET CAP 2024 RANKING – TOP 5 CRYPTOS
Here, we list the top 5 cryptos by market cap in 2024 so the readers can have a better understanding of the concept of crypto by market cap:
1. Bitcoin (BTC):
As the pioneering crypto, Bitcoin has always been a crucial market benchmark. Its price has steadily increased with growing interest in the crypto market, reaching an all-time high of $73,000 in the first quarter of 2024, making it the leading crypto by market cap. The total supply of Bitcoin is capped at 21 million coins, which means that once all coins are mined, the circulating supply will reach its limit, potentially driving the price even higher.
2. Ethereum (ETH):
The price of ETH has risen alongside the diverse applications of Ethereum. Per ETH peaked at over $4,600 in November 2021 before declining, and fluctuates between $3,000 and $3,500 after it reached $4,000 in 2024 Q1, maintaining its position as the second highest-valued crypto by market cap. Unlike BTC, ETH does not have a fixed supply, which adds a variable in considering its long-term market cap.
3. Tether (USDT):
As a stablecoin, Tether is pegged to the US dollar and is less prone to volatile price fluctuations compared to other cryptos, unless an unexpected event such as LUNA crush happens. The primary factor affecting Tether’s market cap is its circulating supply, dependent on market demand and supply dynamics.
4. BNB (BNB):
Native to the Binance Chain, BNB has gained popularity and attention due to its various applications, growing nearly 600 times in price since its launch. BNB ranks as the fourth largest crypto by market cap. Like BTC, BNB has a fixed total supply set at 200 million coins, and its limited future supply will be a significant factor in its price and market cap trajectory.
5. Solana (SOL):
Often dubbed the “Ethereum killer,” Solana has risen in the ranks by market cap due to its versatile applications (like smart contracts and DeFi) and its resolution of Ethereum’s issues with congestion and efficiency. SOL reached a high of $250 in November 2021 and has climbed back to near $200 in 2024 after the falling price. The “meme coin craze” of early 2024 has also driven another peak in SOL’s market cap, and its continued application development could further elevate its market cap.
FAQS
- What is market cap?
Market cap denotes the market value of a financial product or asset and essentially represents the total cost required to purchase that product or asset in the market.
- How do you calculate market cap?
Normally, a company’s market cap is calculated by multiplying the total value of its publicly traded shares by the current market price of the share. For cryptos, the calculation correlates the price per currency unit with the total number of circulating tokens.
- What affects the market cap?
The main factors influencing the market cap are the price and circulation of the product (i.e. crypto, stock).
- Why is market cap important?
The market cap serves as a key indicator for investors to gauge the scale of an investment target within the market and to compare it with competitors in the same industry to strategize their investments accordingly.
- What are the top 5 cryptos by market cap?
To date (May 2024), the top 5 cryptos by market cap are BTC, ETC, USDT, BNB, and SOL (from high to low).
