Crypto Market Cap: Definition and Importance

July 28, 2022 3 min read

Crypto Market Cap: Definition and Importance

Crypto Market Cap: Definition and Importance

As you begin to explore the world of cryptocurrency, you will be introduced to different concepts of investing or trading. These concepts are consequential to ensure success with low risks regarding digital assets. One of the many things you will probably come across is the Crypto Market Cap. 

What is a Crypto Market Cap? 

When the current value and rate of all cryptocurrencies worldwide are listed on a chart and compared with previous data to determine market trends, it is called Crypto Market Cap or Capitalization. 

The Crypto Market Cap is currently over $1.97T, as it has reduced by 2.4% over the last 24 hours. This data is provided on different websites; however, the popular one often used by crypto traders and investors is the Coin Market Cap. 

To understand the Crypto Market Cap, you need to understand what cryptocurrency trading and investing are comprehensively. 

What is Crypto Trading? 

Simply, Crypto Trading involves buying and selling digital assets like Bitcoin, Ethereum, etc. For anyone trading, the aim is to make profits or get more digital assets. More often than not, it can be said to be a short-term activity. 

What is Crypto Investing? 

On the other hand, Crypto Investing involves buying digital assets and keeping them in your wallet for a long time until they appreciate and are exchanged for real money. It is a method to build wealth but comes with high risk because fluctuations in price could affect the value of such a cryptocurrency. 

Do You Need to Trade or Invest in Crypto?

Now that you are provided with two options on what you can do with crypto, you may be confused about what to do next – trade or invest? Well, the answer lies in what you stand to gain – are you hoping to generate profits in the financial market short term or long term? If it is long term, then you are thinking like an investor; however, if it is short term, you are thinking like a trader. 

More so, what distinguishes traders from investors is the ability to take advantage of situations. Traders use market volatility effectively to buy and sell digital assets, while investors always look for the best time to buy and hold for long to get higher returns. 

Whichever strategy you choose to manage your cryptocurrency automatically affects the crypto market cap. Trading and investing play important roles in the general value of cryptocurrencies worldwide, and it could either be on the increase or decrease. 

What is the Future of the Crypto Market Cap?

There are many talks on how crypto will replace fiat money in the future, and the possibility of that happening lies in the crypto market cap. As mentioned earlier, the current market cap is about $2 Trillion, and so far, it hasn’t shown any sign of retrogression. For that reason, many crypto experts have been able to predict the future of the crypto market cap according to the value of different cryptocurrencies. 

For Bitcoin, it is predicted that the total value will be over $100,000. The reason is that trading openings will range between $42,000 to $61,000. However, for investors, the estimated crypto cap will increase up to $406,000. And since Bitcoin is currently the most valuable cryptocurrency, there is no chance it will go lower again; instead, it will plummet by 2025. 

For Ethereum, there is a prediction that it will go over a $20 Million market cap by 2030. The reason for this huge increase is that Ethereum can displace other crypto and financial services. It is the only crypto currently capable of competing with Bitcoin for the world’s digital currency. More so, on Ethereum’s blockchain, many other digital assets are formed. 

Furthermore, there are predictions that the cryptocurrency market will perform even better than the stocks market in a few years. Financial experts believe that as many digital currencies increase in value over the years, the crypto market cap becomes superior to the stocks market. 

Indeed, with market cap, finance experts have successfully forecasted and made price predictions effectively. 

Why is the Crypto Market Cap Consequential?

You may ask: “why is the crypto market cap important?” Well, as the total value of all cryptocurrencies, the market cap determines the future of digital assets. It can help investors or traders decide what deal is good for them and whatnot. Knowing what is safe to buy can avert certain problems or mitigate some risks involved. 

In simple terms: if the value of a coin is $10 and there are 300,000 in circulation, that means the crypto market cap is $3,000,000.