Cryptocurrencies with large market capitalization usually attract more investors because they are considered more attractive than other cryptocurrencies. This is why market capitalization is often used in ranking cryptocurrencies. In determining the market position of cryptocurrencies, its price alone is not enough. However, market value is a more precise indicator. The following is an explanation of the market value types of cryptocurrencies and the way to determine the market value.
1、 Main types of market value of cryptocurrency
Cryptocurrencies classified by market value are divided into the following four main categories according to their market value:
1. Giant stock
Mega cap only includes two cryptocurrencies: BTC and ETH. At the time of writing, BTC's market value was about $470 billion, while Ethereum's market value was about $230 billion.
2. Large cap stocks
The market value of large cryptocurrencies exceeds $10 billion. They are considered low-risk investments because they have a good risk return record. Several examples of large cryptocurrencies are Tether (USDT), USD Coin (USDC), BNB, XRP, Cardano (ADA), SOL (SOL) and Polkadot (DOT). Many large cryptocurrencies are stable because they can maintain a relatively stable value.
3. Mid Cap
The cryptocurrency market value of mid cap stocks ranges from $1 billion to $10 billion. Investors believe that medium cryptocurrencies are high-risk and high return coins because they have untapped potential. At present, Dogecoin (DOGE), DAI, Shiba Inu (SHIB) and Litecoin (LTC) are more popular medium cryptocurrencies.
4. Small shares
Small cryptocurrencies are often the most risky. Their market capitalization is usually less than $1 billion. Many new cryptocurrency items, such as eCash (XEC), NEO, USDD and Bitcoin Gold, fall into this category.
2、 Determine the market value of cryptocurrency
When comparing different cryptocurrencies, you may encounter the term "liquidity", which is a frequently mentioned financial phrase and has good reasons to be tossed around. Liquidity can significantly affect market value and investors' decisions to buy and sell coins.
Liquidity is a term used to measure the ability of an asset to be traded at its current market value. The goal of cryptocurrency investors is to buy and sell cryptocurrency at a reasonable price according to the price of cryptocurrency. For example, if you own a small amount of Bitcoin and want to convert it into dollars, the seller must have enough demand to make a profit or sell it at a reasonable exchange rate. Therefore, higher liquidity tends to be better, usually associated with lower risk.
2. Fully diluted market value
To determine the market value of a cryptocurrency, we need to know the price of a coin and the number of coins circulating around the world. But what happens when the total supply of cryptocurrency is in circulation is called a fully diluted market value.
In short, the fully diluted market value is an indicator used to determine the market value of a cryptocurrency when all its coins enter the global circulation. For example, Bitcoin. Remember the 2100 upper limit of Bitcoin? Therefore, when the global circulation of Bitcoin reaches this figure, it will be called the fully diluted market value. If we put this into a formula, assuming that all Bitcoin coins are in circulation:
Fully diluted market value of Bitcoin=current price (at the time of writing) x US $21 million=US $24450 x US $21 million=US $513.45 billion or US $513.45 billion
Market value is used to determine the dominant position, popularity and value of cryptocurrency in the market. If the supply of a cryptocurrency is scarce, it is often more valuable. A coin with a high price may still have a large market value, even if the circulation supply is small, and vice versa. Cryptocurrency is divided into four main categories: large stock, large stock, medium stock and small stock. Liquidity and fully diluted market value are important factors to consider before investing in cryptocurrency. The crypto universe is volatile and active.