A Guide for Crypto Market Newbies
A Guide for Crypto Market Newbies : Learn what the crypto market cap is, why it is relevant s, which careers use this knowledge, and how to deepen your knowledge of cryptocurrency.
When entering the crypto world, you may have heard the term “market cap”, which stands for market capitalization. whether you are interested in crypto professionally of as a hobbyist, understanding the nuances of the crypto space and the factors influencing the future of crypto can help you make educated decisions for your future. The crypto market cap has significant implications for financial markets, with higher caps being more stable for investment. If you’re entering a career in crypto, a deep understanding of the crypto market cap and how it influences investment strategies and long term market predictions can make you an asset in your field.
Discover more about the crypto market cap, how it works, and which professions utilize this knowledge in the crypto space.
What is crypto market cap?
A Guide for Crypto Market Newbies : Simply put, the crypto market cap is the relative size of a cryptocurrency. You calculate it by multiplying a coin’s market price by how many of the coins are currently in circulation.
For example, if you valued three coins at $2 each, you can calculate the market cap of that coin by multiplying number of coins by their value in this case, 2 x $3= $6. This same principle applies to all cryptocurrency coins.
As you might imagine, crypto price deviations can cause huge market cap fluctuations. If you hear the term ” global cryptocurrency market capitalization, that refers to the sum of all cryptocurrency coin market caps.
What is crypto market cap important?
A Guide for Crypto Market Newbies : The crypto market is important because it can act as a rough metric for potential investors about how stable a certain coin is. Essentially, the crypto market cap is a measure of the popularity of a particular cryptocurrency coin.
For those investing in crypto or interested in its long term growth, cryptocurrency coins with large market caps can represent the high popularity or the coin and a raised potential for long term growth. These coins have a longer term track record of growth and can generally withstand more people cashing out coins before the price significantly drops.
Your can imagine this similar to stack of paper. If there is one paper, ti would be pretty easy to rip. However, the more papers you stack together, the more difficult it becomes to rip. Crypto market caps are the same way the thicker they are, the less easy they are to manipulate.
In stocks, you can divide market caps into “large cap” and small cap. You can categorize crypto market cap sizes similarly. This market cap can help you understand the long term growth in the coin. While estimates will vary, crypto market caps generally fall into the following categories:
- Large-cap cryptocurrencies: Market caps over $10 billion
- Mid_cap cryptocurrencies: Market caps between $1 billion and $10 billion
- Small-cap cryptocurrencies: Market caps under $1 billion
However, it is important to recognize that market caps do not represent relative risk. Cryptocurrencies are incredibly volatile, so market cap is just one factor to consider before investing in cryptocurrency.
What is a liquid market?
A Guide for Crypto Market Newbies : A ” liquid market” is a market where an investor or trader can easily and quickly sell, buy, or trade a particular asset. “Liquidity, on the other hand, defines whether you can buy or sell an asset without impacting the market price dramatically. A liquid market has a high volume of available buyers and sellers. Because of this, traders can generally sell their assets and find new assets to buy quickly. Many crypto coins have a liquid market, including bitcoin. Markets that are high volume and liquid are typically favored over lower volume trading markets.
What is the current crypto market cap?
A Guide for Crypto Market Newbies : As of June 04, 2024, the current global cryptocurrency market cap is over $2.56 trillion However, this represents a large dip, as the market cap reached nearly $3 trillion in early November 2021. Though the future of cryptocurrency is largely unpredictable, some financial experts predict the market cap could grow by 10 to 100 times its current size.
Conclusion
A Guide for Crypto Market Newbies : The crypto market cap represents the total value of all coins that have been mined, either for a specific cryptocurrency coin or for all coins, known as the global market cap. Understanding the crypto market cap can enhance your knowledge of cryptocurrency and help you make educated investment decisions, whether for yourself or within your career.
When pursuing a career in cryptocurrency, taking courses in emerging markets and cryptocurrency can help you make informed investment investment decisions, understand jargon specific to the crypto industry, and determine the right next steps for you in this exciting field. To start, consider taking couches on coursers, such as Decentralized Finance (DeFi) Infrastructure by Duke University or Blockchain and Cryptocurrency Explained, taught by the University of Michigan, to help you build your foundation.