The main characteristics of every digital asset presented in all market charts are:
- crypto market cap;
- trade volume;
- cryptocurrency price.
All these indicators are interconnected. For example, to calculate the crypto market cap, you should multiply the overall number of assets in circulation right now by the relevant price of one coin. There is also a term fully diluted market cap meaning the capitalization of all the assets that are in circulation now plus those that will be issued in the future, meaning the total number of all the coins that will ever be mined. This indicator is possible for those assets whose supply is limited.
How Does Market Cap Affect Cryptocurrency Price?
It would be correct to say that cryptocurrency price and supply affect the market cap. The lower the supply and the higher the coin’s scarcity, the higher its value. Coins with a small supply but a high price have a large market cap, the same as coins with an ample supply but a low price.
Here is a crypto list by market cap:
- Bitcoin ($452,3 billion)
- Ethereum ($205,4 billion)
- Tether ($68 billion)
- BNB ($52 billion)
- USD Con ($41,9 billion)
- XRP ($20,9 billion)
- Binance USD ($16,2 billion)
- Cardano ($13,9 billion)
- Dogecoin ($12,5 billion)
- Polygon ($10,8 billion).
All the assets from the list have different market prices.
What Capitalization Is Better?
Picking crypto assets by a cap, it is important to remember that mega and large-cap funds, such as the market leaders BTC and ETH, are slow to grow in value, so they are good for long-term investments. At the same time, low and middle-cap funds are more sensitive to market trends and news backgrounds, so they grow and drop more easily. So, considering buying coins before the bull trend, consider middle and low-cap assets. The best option would be to diversify your portfolio by buying large and small-cap coins.
What Affects the Cryptocurrency Market ?
Let’s explore the factors that influence the cryptocurrency market’s prices:
Firstly, demand and supply are the primary drivers affecting not only the crypto market but also other sectors. If there is an unlimited supply of coins, the demand for them will be low, and vice versa. Limited supply helps maintain an asset’s price.
Investor sentiment, which reflects their perception of the coin’s future development and associated investment risks, is another crucial factor.
Market trends are also essential, and larger assets generally establish the market trend, followed by other coins. The cryptocurrency market experiences ups and downs, which is typical for this sector.
The state of the global economy also has an impact on the cryptocurrency market.
Finally, news and hype from the crypto industry significantly affect the market. When there is a buzz around a particular coin, people tend to buy it en masse, driving up demand for the asset.