🧠 Day 5 of learning crypto — A $0.01 coin isn't automatically cheap.
This confused me when I started.
I used to think:
"If one coin costs $0.01 and another costs $1,000… the $0.01 coin has more room to grow, right?"
❌ Not necessarily.
The missing piece is something called Market Cap.
So what is Market Cap?
The simple formula is:
Market Cap = Coin Price × Circulating Supply
That's it.
Let's use a completely fictional example 👇
🪙 Coin A
Price = $1
Circulating supply = 1 million
Market Cap = $1 million
🪙 Coin B
Price = $0.01
Circulating supply = 1 billion
Market Cap = $10 million
Even though Coin B costs only 1 cent, its market cap is already 10× larger than Coin A in this example.
That's why looking at the price of one coin alone can be misleading.
And this is where another term comes in:
Circulating Supply
It's basically the approximate number of coins currently circulating in the market and held by the public.
There are also:
Total Supply → coins currently in existence, excluding verifiably burned coins.
Max Supply → the maximum number of coins that can exist, where a maximum is defined.
There's also FDV (Fully Diluted Valuation), which uses maximum supply × price. That's something I'll learn properly before explaining it in a future post. 👀
My beginner lesson today:
Don't look at a coin and think:
"$0.01 = cheap."
Instead ask:
"How many coins exist, and what is the market cap?"
But even market cap
This confused me when I started.
I used to think:
"If one coin costs $0.01 and another costs $1,000… the $0.01 coin has more room to grow, right?"
❌ Not necessarily.
The missing piece is something called Market Cap.
So what is Market Cap?
The simple formula is:
Market Cap = Coin Price × Circulating Supply
That's it.
Let's use a completely fictional example 👇
🪙 Coin A
Price = $1
Circulating supply = 1 million
Market Cap = $1 million
🪙 Coin B
Price = $0.01
Circulating supply = 1 billion
Market Cap = $10 million
Even though Coin B costs only 1 cent, its market cap is already 10× larger than Coin A in this example.
That's why looking at the price of one coin alone can be misleading.
And this is where another term comes in:
Circulating Supply
It's basically the approximate number of coins currently circulating in the market and held by the public.
There are also:
Total Supply → coins currently in existence, excluding verifiably burned coins.
Max Supply → the maximum number of coins that can exist, where a maximum is defined.
There's also FDV (Fully Diluted Valuation), which uses maximum supply × price. That's something I'll learn properly before explaining it in a future post. 👀
My beginner lesson today:
Don't look at a coin and think:
"$0.01 = cheap."
Instead ask:
"How many coins exist, and what is the market cap?"
But even market cap