Capitalization – a word that comes from traditional financial instruments. This is the name for the total market value of all assets in circulation (market of services/goods, industry, individual company). With cryptocurrencies, the situation is more complicated, since they do not have a physical form, security or affiliation with a specific country. However, the market capitalization of a cryptocurrency is still very important.
Bitcoin total value chart (2017-2019):
What is cryptocurrency capitalization (market capitalization)
Market capitalization of a cryptocurrency is the total value of all digital coins currently in circulation. A high indicator may indicate both the high value of the coin and a large number of it in circulation. In both cases, this is an important parameter for investors. If the Republic of Kazakhstan is growing, it means that the market is developing and cryptocurrency is becoming popular.
There is no need to deny that most digital currencies are not backed by anything and are supported only by the holders’ faith in their prospects. But if a currency is bought, it means that it has potential, people need it, and over time it will expand its scope of use and increase in price.
Capitalization is constantly growing
If you look at the growth indicators Bitcoin shows, you can conclude how much the capitalization level of this currency has risen. In fact, the growth of cryptocurrency capitalization is due to its properties. That is, because its quantity is constantly increasing. Many experts also say that the concept of market capitalization of cryptocurrencies is very relative, since it is impossible to accurately calculate the number of, for example, bitcoins that were issued. Moreover, there are a certain number of bitcoins that have been lost due to damage to hard drives. After this, it is impossible to restore access to user wallets.
Dominance index
The Dominance Index metric was created by a community of miners and cryptocurrency experts to enable more convenient evaluation analysis and predictions in this area. The concept of a dominance index is used to measure the share of Bitcoin in the total number of digital currencies in the global market space. As for bitcoins, the capitalization of this currency, and, accordingly, the dominance index was the highest for a long time. At this stage, experts note that the Bitcoin dominance index is falling, as other, no less strong currencies appear on the market. This applies, for example, to Ethereum, which has recently rapidly taken a stable position. Thus, the dominance index shows how successful and productive the development of any cryptocurrency is in comparison with other market models.
Weighted average
When starting to work with bitcoins, all users were familiarized with the information that the maximum threshold for issuing the currency is 21 million units. If you find exact indicators of how much one Bitcoin coin costs and look at data on how many coins have already been issued, then the capitalization indicator can be calculated independently. As already mentioned, exact indicators of the value of coins are quite difficult to find, so you should trust only trusted sources. And by tracking the dynamics of capitalization and analyzing the dominance index, you can understand how to make forecasts regarding the further growth of the currency. If the user wants to determine the weighted average, this can be done by analyzing the value of the coin on different exchanges. Then it will be possible to calculate the average amount and use it to determine further indicators.
How artificial are the indicators?
Since Bitcoin is a completely decentralized digital currency that still operates in the corresponding digital space, it, as you understand, will be very sensitive to any changes. That is, it is very easy to play on the coin’s exchange rate for those who have already understood the principles of Bitcoin’s functioning. If you track the coin rate on different exchanges and exchangers, you might have seen that different sources can provide indicators that are very different. But when the user wants to independently determine this indicator, he will take the total number of coins issued and multiply it by the highest value of the coins. And this, as you understand, will also depend on the dollar exchange rate, if you are looking at the bitcoin exchange rate to this currency. Bitcoin capitalization was able to set a record back in 2013. As for the current state, then, according to experts, it is only a few steps away from reaching the absolute maximum. The artificiality of indicators can also be influenced by the activities of traders, who can set their own rates on exchanges. Very often this provokes fluctuations in the exchange rate, when the price either soars or bursts like a soap bubble.
High exchange rate volatility
The concept of volatility refers to the processes of how quickly and noticeably the rate of a cryptocurrency changes. That is, speaking in mathematical terms, volatility will indicate the possibility of rapid price changes. It will not be news to anyone who works with bitcoins that the volatility of this coin can sometimes surprise even experienced traders. In the cryptocurrency market, the concept of volatility is directly related to possible risks. In this regard, bitcoins are a very risky currency, but no less attractive. If you have a good understanding of market processes or simply have luck, then you can make a great rise in exchange rate fluctuations. Bitcoin's volatility exceeds that of other digital currencies and even gold.
Playing with volatility can be dangerous. At a minimum, because even if you are trying to hold on to a certain number of coins in case the exchange rate rises and you can get much more, there is a risk that over time a more effective currency will suddenly appear, which will eclipse the boring one with its popularity bitcoin.
As for the benefits for traders, if we talk about those whose strategy for working in the market is very stable and calm, then they will have very little chance of achieving wild success. The Bitcoin market is rather created for those who know how to aggressively operate the currency, turning its exchange rate towards themselves in order to obtain the highest income.
How is it calculated
Anyone can calculate the capitalization of any cryptocurrency. To do this you need to know only two parameters:
- the total number of coins in circulation,
- coin rate (usually taken in US dollars)
And multiply these indicators:
Rate * Quantity in circulation = Market Capitalization
For example, let’s calculate the RK of Bitcoin and Ripple, as currencies that are completely opposite in many respects. All data is taken as of April 23, 2020.
- For Bitcoin the figure will be $5,486.89 * 17,662,587 = $96,912,643,153
- For Ripple $0.301139 * 42,020,265,728 = $12,649,334,319
Total capitalization of the crypto market
Let's start by defining the overall market capitalization. This is the total cost of Bitcoin, Ethereum, Litecoin, Neo and all other trading crypto assets. Today it is equal to $176,72,394,693, Bitcoin dominance is 54.51%. This means that more than half of all funds invested by users are invested in Bitcoin.
Real-time information on cryptocurrency capitalization:
- Market Cap: $374.39 B
- 24H Volume: $87.96 B
- BTC Dominance: 57.63%
Bitcoin Dominance Index
Bitcoin Dominance Index (BTC Dominance) is the percentage of the total capitalization of the cryptocurrency market that Bitcoin currently occupies. You may have seen this percentage on Coinmarketcap but haven't thought about what it means. But in fact, this is a very important indicator of the state of the entire crypto market. Knowing how to use it offers endless possibilities.
How does this information affect the market?
Before 2020, BTC was very dominant in relation to altcoins, its share reached 90%. But then it began to decline, and altcoins rapidly increased in popularity. Understanding downward and upward trends, their sequence and cyclicality, analysts predict the future behavior of cryptocurrencies. We can say that all forecasting is based on this.
Percentage of total market capitalization
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The market capitalization of cryptocurrencies is presented by many sites in real time. Some online resources include a mouthguard table as an additional service. Others specialize in tracking the crypto market:
- The very first and most informative one today is CoinMarketcap.
- The data is organized a little more simply on the analog Coingecko.
The vast majority of other sites dedicated to the capitalization of the cryptocurrency market are considered copies of Coinmarket cap with reduced functionality.
TOP 10 cryptocurrencies by capitalization
Rating of cryptocurrencies by capitalization online
| Name | Price | Market capitalization | Offers | Change % (7D) | |
| 1 | Bitcoin | $11,670.12 | $215,436,752,075.16 | 18460543 BTC | +1.21% |
| 2 | Ethereum | $423.45 | $47,501,214,431.00 | 112176678.3115 ETH | +7.76% |
| 3 | Ripple | $0.29 | $29,437,600,873.75 | 99991850794 XRP | +5.86% |
| 4 | EOS | $3.11 | $3,170,831,833.19 | 1020544523.0722 EOS | +2.91% |
| 5 | Bitcoin Cash\/BCC | $289.47 | $5,352,210,462.06 | 18489689.6468 BCH | +2.85% |
| 6 | Litecoin | $56.05 | $3,681,435,211.34 | 65681270.496757 LTC | +3.05% |
| 7 | Binance Coin | $22.80 | $3,546,237,056.40 | 155536713 BNB | +7.6% |
| 8 | Cardano | $0.14 | $3,593,491,976.57 | 25927070538 ADA | +0.29% |
| 9 | Stellar | $0.10 | $2,087,056,510.77 | 20223415802 XLM | +4.31% |
| 10 | Tether | $1.00 | $7,384,706,190.57 | 7377328861.7045 USDT | +0.1% |
Brief information as of 04/23/2019:
- Bitcoin. "Digital Gold", the world's first cryptocurrency. Current capitalization is $97,939,217,990, exchange rate is $5,545.52.
- Ethereum. A cryptocurrency based on the principle of smart contracts and providing extensive opportunities for developers. Current capitalization is $18,477,589,624, exchange rate is $174.64.
- XRP (Ripple). A network with fast and cheap payments, actively used in banking structures. Current capitalization is $13,670,657,454, exchange rate is $0.325565.
- EOS. Platform for creating decentralized applications on WebAssembly. Current capitalization is $5,531,851,824, exchange rate is $5.32.
- Bitcoin Cash. One of the Bitcoin clones with slightly improved functionality. Current capitalization is $5,352,035,307, exchange rate is $301.52.
- Litecoin. "Lite" fork of Bitcoin. Current capitalization is $4,789,765,492, exchange rate is $77.93.
- Binance Coin. A token of the same name on a cryptocurrency exchange that helps save on commissions. Current capitalization is $3,420,938,431, exchange rate is $23.68.
- Cardano. A combination of smart contracts and multi-layer architecture. Current capitalization is $2,410,528,246, exchange rate is $0.077636.
- Stellar Lumens. A platform that supports IOUs in digital form. Current capitalization is $2,179,984,352, exchange rate is $0.112414.
- Tether. A stable currency whose value is always $1. Current capitalization is $2,067,310,281.
What affects its indicator
We have already identified direct factors - the exchange rate and the total number of banknotes in circulation. But there are many indirect factors that influence the indicator. Among them:
- General interest in cryptocurrency. For example, Bitcoin is a confident leader because everyone has heard about it at least once, even those who have nothing to do with finance.
- User trust. Therefore, the capitalization of new currencies can remain low for a long time and increase gradually or in spurts as confidence grows.
- Scheme of behavior of large market players.
- News from analysts, opinions of famous experts about the potential of a particular project.
- The currency has modern innovations that can become a significant breakthrough in its field.
- Reaction to cryptocurrency by the media and government authorities. Implementation of laws restricting or encouraging digital money.
For example, in December 2020, when Bitcoin rose to its maximum, many reasons came together successfully: cryptocurrencies were legalized in Japan, SegWit2x was developed, and the media began to massively disseminate information. As a result, demand has skyrocketed to levels never seen before.
What influences - main parameters
The main indicators involved in the calculation are the number of coins and their market value. The cryptocurrency community cannot influence the first component, but the price of Bitcoin changes under the influence of many factors. Cryptocurrency today (from the exchange rate perspective) is volatile and can bring many “surprises” to investors.
The cost of Bitcoin, as well as capitalization, depends on the following factors:
- Politics of large countries. Digital money and its success depend on the decisions of government institutions. The introduction of a ban and the abandonment of cryptocurrencies inevitably lead to a decrease in interest, a decrease in the value of any coin and a drop in capitalization. An example is the actions of the Chinese government. After the exchange was banned, the value of almost all digital money collapsed. South Korea and a number of other countries showed even greater severity. In the situation with the legalization of digital money, the situation changes in the opposite direction - the rate goes up.
- Opinions from financial analysts, developers and influencers in the cryptocurrency community. Positive statements from experts have a positive impact on the exchange rate and strengthen the position of digital coins. Negative comments have the opposite effect: reducing the value of Bitcoin.
- News. Everything that happens around Bitcoin affects the position of the token. Capitalization growth is driven by the addition of BTC to exchange platforms, the emergence of futures (as happened at the end of 2020), the introduction of new technologies, the signing of agreements with large partner companies, and so on. When negative or positive news appears, capitalization changes slightly, and then returns to its previous position.
- Speculation. Experienced investors know terms like pumping and dumping. We are talking about the actions of large investors organizing panic in the cryptocurrency market by creating a news background and parallel transactions with digital money. Despite the high capitalization of Bitcoin, the parameter is small taking into account the total turnover of funds. The algorithm is as follows. A group of traders with influence on the market launches negative news, and immediately after begins dumping large volumes of coins and creates panic in the market. Other participants are selling Bitcoins, causing the exchange rate to decline. After the price drops to the required level, dumpers buy cryptocurrency in anticipation of a price increase. Pampers operate on the opposite principle.
- The emergence of competitors. According to many, Bitcoin is outdated, and new digital money is ahead of “digital gold” in a number of parameters: commission, transaction speed, anonymity of transfers, etc. Over time, new coins may occupy a larger market share, which will lead to a decrease in the value of BTC with all the ensuing consequences .
Bitcoin's capitalization is constantly changing. At the end of July, the parameter was twice the current value. In case of further price decline, the negative trend will continue.
Where to view capitalization statistics for today
There are several services for this, for example:
Profinvestment
On the website you can see the current cryptocurrency rates and find out information about capitalization, which is updated online. Almost all existing coins are represented. Also, the site has a lot of other useful information about cryptocurrencies and working with them.
Coinmarketcap
The largest statistical resource on the crypto market and cryptocurrencies.
Shows information about the market capitalization, price, trading volume of several thousand tokens and coins, from the most popular to the little-known. Information is collected from crypto sites around the world and updated almost in real time.
Coincheckup
The functionality of this site is even wider than the previous one.
In addition to information about exchange rates and capitalizations of currencies, here you can look at historical data on the state of the market, conduct an in-depth analysis, look at the section with forecasts, and see the activity of developers. Quite nice is the ability to filter currencies based on several criteria - for example, Platform, Gaming, Privacy, etc.
Cryptocompare
A useful site for investors that allows them to track the results of their transactions, the total value of the crypto portfolio, its dynamics, and the profitability of each specific token.
There is a possibility of risk analysis. In addition to information about crypto, the site provides information about cryptocurrency exchanges, mining, and wallets. In one of the sections you can play games like online casinos.
CoinGecko
Another popular tool for tracking data on all popular cryptocurrencies and not so much.
It has an easy-to-use and intuitive interface. In addition to the most popular data, the service provides the opportunity to find out how resistant a particular currency is to a 51% attack. And using its own special algorithm, it builds a separate list of leaders, which often differs from the generally accepted one.
Comparison of market capitalization levels
Based on the current level of capitalization, you can learn a lot about this or that type of digital money. Considering the value of this indicator for Bitcoin, we can safely say that at the present time this digital money firmly occupies a leading position.
Bitcoin currently accounts for more than 55% of the total digital money market. At the same time, the market share of Ethereum, which is the closest competitor to Bitcoin, is less than 20%.
This state of affairs is due to the fact that among the huge amount of digital money there are practically no coins with a high price. Currently, there are more than a hundred types of digital money in demand among users. At the same time, only 13 types of digital money can boast a capitalization level exceeding a billion dollars. The capitalization level of most altcoins does not exceed twenty million dollars.
By analyzing the described indicator, we can draw a conclusion about the stability or vulnerability of the selected type of digital money. Practice shows that quotes for coins with a small capitalization level can seriously change under the influence of various news reports. Jumps in prices for such coins may be caused by the conclusion of large transactions between leading players in the digital money market. Since the cryptocurrency market has a high level of volatility, price fluctuations can be very serious.
Holders of digital money with low capitalization may suffer losses due to the actions of large speculators. If market makers, by prior conspiracy, simultaneously open deals to sell a currency with a low capitalization, then its quotes may drop to minimum values.
Digital money with a high level of capitalization is practically not subject to large jumps caused by the actions of large speculators. This is due to the fact that due to the high level of capitalization, most players do not have the necessary amount of capital to manipulate quotes.
As mentioned earlier, the described indicator reflects the number of coins that were issued, as well as their current value. At the same time, the described indicator does not take into account who exactly currently owns the coins: ordinary investors, market makers or project creators.
One of the key disadvantages of some types of digital money is that a significant amount of coins remains at the disposal of developers after the ICO. Thus, digital money developers, having many coins, can take speculative actions that can have a significant impact on digital money quotes. Consequently, the described indicator does not always allow one to obtain reliable information about the stability of the type of digital money in question.
The Ripple cryptocurrency is one of the leaders in terms of capitalization among digital money present in the modern financial market. If we focus only on this indicator, we can conclude that this digital money is stable and is not subject to sharp fluctuations in quotes. At the same time, a huge number of Ripple coins remained in the hands of the developers after the ICO. Thus, if the need arises, the creators of this digital money can quickly reduce their prices by starting to sell the coins at their disposal.
