Market Capitalization or Market Cap

Market capitalization is an indicator, or statistic, of almost mandatory use within the crypto ecosystem. It is very common to find this reference on different platforms, and it shows how much capital is invested in a crypto or cryptocurrency project. When we talk about capital, it refers to the total amount of money in US dollars that people have invested in that particular crypto.

With the Market Cap indicator, we can indirectly see how solid the cryptocurrency or token is, it is also very important to emphasize that for a good reading of the market capital it is necessary to take into account the current price of the crypto since through This comparison can reveal the confidence that this particular project can have. A cryptocurrency with a high price but a low capitalization is not the same as a coin with a high capitalization and a relatively low price.

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Is it good for a cryptocurrency to have a high market capitalization?

Of course, yes, the idea is that this capitalization is constantly growing or stable, and as we mentioned before, a high capitalization or a good level of investment in a cryptocurrency always generates confidence.

However, we are not always going to find cryptocurrencies or tokens with an exorbitant figure that indicates a good market capitalization. Sometimes we will find some projects that despite having a normal capitalization have great popularity, an example of this is crypto assets such as Cardano, Solana, Tether, USD Coins, and XRP that are highly supported despite having a relatively normal capitalization. This is due more than anything to the use of extra services that these currencies can provide us, some being the link to smart contracts and others being used due to their stable currency characteristics.

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Can the market capitalization change?

Of course, for a cryptocurrency or token to maintain its market capitalization can be quite a challenge, as such a feature can be highly susceptible. For example, news can affect the image of a cryptocurrency and consequently change its market capital because many users tend to give great importance to external factors such as the policies of some governments, news, and reports, among others.

It is also true that they can not only be negatively affected, in the same way, and due to the same factors the market capitalization of a cryptocurrency can increase due to positive events for the cryptocurrency.


How does the market capitalization of a cryptocurrency increase?

When we talk about the increase in the market capitalization of an asset such as cryptocurrencies, we will find that various factors help to increase its capital over time, among the factors that most affect market capital we find:

Supply and demand: the theory of supply and demand tells us that the more scarce an asset or good is, the higher its price will be and therefore its market capital will increase. This is because the purchase and sale of the asset, in a market where its price is often speculated, generates more or less interest depending on the trends, which causes the value to fluctuate.

Speculation: it is the factor that perhaps most affects the market capitalization of a cryptocurrency and it is that many investors acquire cryptocurrencies at a price higher than the current market price only with the hope that in the future it will revalue by inflating the value more and more. of the cryptocurrency and therefore increasing the market capital.

The use-value of the cryptocurrency: Some cryptocurrencies are not simple digital assets, some cryptocurrencies allow us to exchange them for some good and service, all this depends on how it is designed, for example with the Ether of Ethereum we can create smart contracts which give us access to the creation of Dapps, or with Tether that we can use its token as a kind of digital dollar, this extra value that certain currencies offer us helps the project spread to more users and therefore there will be more investment.

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Currently, the cryptocurrency with the highest capital collection is Bitcoin with approximately 400 billion dollars, this figure can increase or decrease depending on the different factors mentioned above.

This is due to other factors that can affect the price or the trust that users place in a cryptocurrency, such as the foreign policies of a government, news that negatively affects the cryptocurrency, or sometimes things as trivial as comments from someone very influential. In the same way, these factors can benefit the market capitalization of a cryptocurrency, such as the comments made by Elon Musk about Bitcoin or the use of Bitcoin as the official currency within El Salvador.

A very popular ranking within the crypto world is the classification of the most important cryptocurrencies according to their capitalization, and among them, we have Bitcoin in the first place followed by Ethereum, Tether, USD Coin, BNB, and Cardano, it should be noted that this classification is temporary and it tends to change very often, so it is likely that this classification will change shortly.

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