The Beginners Guide to Bitcoin Market Capitalization

April 20, 2021 | AtoZ Markets – If you are thinking of investing in cryptocurrency, then go ahead and invest in the one that is popular and trendy. No other cryptocurrency is making more money than Bitcoin these days, which is now the world’s leading cryptocurrency. Bitcoin has done a few things that made it the top dog in the cryptocurrency segment for so many years. It started by building a solid reputation for itself. It was the first cryptocurrency in the world that was unregulated from the word go. Being the first of its kind made it popular but being unregulated made it acceptable.

Despite their popularity, Bitcoins are only available in limited numbers. In fact, the total supply of Bitcoin maxes out at 21 million only. As of now, just 19 million coins are in circulation. A simple rule of demand and supply applies here, as there are fewer Bitcoins available, increasing their demand around the world.

Bitcoin is more accessible to users than other options, thanks to a bigger ecosystem. It has more merchants and applications accepting, which makes it a convenient digital currency.

What is Market Cap?

Bitcoin is the leading cryptocurrency in the market in terms of market capitalization. It has increased the potential and interest using its blockchain technology. The phenomenal success of Bitcoin has also left it with some competitors, but none has challenged Bitcoin’s acceptability and success. Given its success and acceptability worldwide, one might think it is everywhere, but it is not.

How much of the world’s money is in Bitcoins? Back in March 2020, one Bitcoin had a total value of $8790. Around 0.7% of the world’s wealth was in Bitcoins, which was roughly $160 billion. Today, the overall market capital of Bitcoin has a calculated value of $647 billion. To calculate the market of the Bitcoin Market Capitalization, multiply the number of Bitcoins in circulation by the prize of one Bitcoin.

How is the Market-Cap Calculated?

The market-cap of a company helps us analyze the overall size of the company. It also lets us discover the value in terms of its shares in the stock exchange. Take the company’s outstanding shares and multiply the figure by the share price in the stock exchange. First thing to note is that Bitcoin is not a company, but it has a market cap. In this case, the market-cap would be the value of all Bitcoins that the provider has issued to date—Every single coin matter when it comes to calculating the market-cap.

For Bitcoin, market capitalization keeps fluctuating often, but that depends on a variety of factors. Keep in mind that the market-cap calculation indicates how investors look at that company from a business viewpoint. Bitcoin enjoys a positive reputation in the market, which means that it has favourable reviews from users. If its overall outlook were falling, it would suggest that the outlook of the company is negative.

Bitcoin and other cryptocurrencies can be calculated using the same formula.

Market cap = total circulating supply x per coin price

It is more about the circulation of coins in the market and the price of each coin. The price of a coin is €300, with 10,000 coins circulating in the market.

300 x 10000 = 300,0000

Categorizing the cryptocurrency in marketing caps shows the amount of risk investors are willing to take.

Why Does it Market Capitalization Matter?

Bitcoin has had an exciting history. Back in the first quarter of 2012, it had a cap of around $1.02 billion. Over a period, the cryptocurrency began to have fluctuations but maintained a positive outlook. During 2017, the company experienced some term as “crypto boom” and saw more investors coming in. the market-cap by this time had reached $237.6 billion.

The roller coaster ride of Bitcoin’s outlook did not stop there, as the cryptocurrency plunged to just $278 billion. This was a notable drop in the capital from previously recorded $557 billion. It is known that the sentiment of Bitcoin investors is affected by numerous factors. It can be said that the cryptocurrency market is a volatile place to be, and Bitcoin was no exception. Market sentiment plays a pivotal role in deciding the market-cap—the rumour of governments acting against cryptocurrencies around the world that led to an investor sell-off. 

Market Cap can be Categorized into Three Categories

Large cap

Cryptocurrencies that have a significant market cap are considered safe investments. Companies with a market cap of more than ($10) billion fall into this category. This puts Bitcoin on top, with Ripple and Ethereum as other cryptocurrencies in the list. Investment wise, these companies would be your safest bet. They might not make you any major gains, but they will keep your investment safe with a possible occasional conservative growth.

A word of caution when investing in cryptocurrency, know that they are more volatile than traditional stocks.

Mid cap

Cryptocurrencies have a smaller market cap but more risk when compared to large cryptos that fall into this category—the overall market cap of these remains between ($1) billion to $10 billion. Mid cap cryptos have a smaller cap, but they have growth potential, which is why they are riskier than their large cap counterparts are.

Small cap

These cryptocurrencies have one of the smallest market-cap of all. The smaller cap makes investing in these currencies a risky affair. Chances of a failure are bit higher. Currencies with a market cap of $1 billion or less fall into this category. Having the smallest market cap of all, these currencies may take a chunk of your investment in little time. The reason for investing in these is their potential to explode and make massive returns on your investment.

Final Thoughts

Investing in a cryptocurrency can be risky if you do it without help. Arming yourself with the right information you will soon realise that you do not want to be on the fence in this emerging industry. Zeply makes getting into crypto easy, with 24/7 support and Bitcoin transactions with 0% fees. We are creating a beautifully diverse community where everyone is welcome. Our exchange is built with you at the forefront, its dynamic and easy to use interface is designed so that even the budding crypto enthusiasts or novices can use it. Will you join us too? Don’t miss out, Bitcoin is the future be a part of it!

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