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How Does Crypto Currency Market Cap Affect Cryptocurrency Price?

How Does Crypto Currency Market Cap Affect Cryptocurrency Price? - Coming Soon in UAE
24 January 2023
5 minutes to read

Three main features of every crypto asset are cryptocurrency coins price, trade volume and market capitalization. This article will be all about the market cap – its calculation and importance.

To get cryptocurrency capitalization, you should multiply the asset’s current value by the global coin circulation. So capitalization depends on the cryptocurrency prices and the number of assets.

Generally, The higher the cap indicator, the higher the dominance among the competitors in the industry. Look at the cryptocurrency ranking on Coinmarketcap and sort coins by the cap, and you will see that the most popular and dominant digital assets are ranked first by cap.

 

All crypto assets are divided into three groups by market cap:

  • Large-cap,
  • Middle-cap,
  • Small-cap.

Large-cap assets are popular BTC, ETH, and other coins. They are considered to be relatively established assets that are not very sensitive to market fluctuations. These coins are the market leaders with the highest dominance. They guide the market and set the trend.

Mid-cap assets are such coins as Polygon and Alrogand. They are more sensitive to the news background and market trends changes. Such coins are more volatile. That is the reason why it is good to store some mid-cap assets – when the market boosts, they will likely gain in value.

 

The Correlation Between Cryptocurrency Coins Price and Cap

Being one of the components of the capitalization formula, price determines cap. If an asset has a small circulation, it still can have a high cap if its price increases. So even if the circulation is low, the asset’s price can provide a billion capitalization.

Another situation is when an asset has a large supply in circulation but a low price for each coin, it may have a low cryptocurrency coin market capitalization. We conclude that price plays a crucial role in the indicator of market capitalization.

 

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