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The total capitalization of cryptocurrencies is reported by all leading aggregators, which makes it relatively easy to track this indicator. But what does it mean and what can it tell us about the market? Let's find out.
So, let's go! Market capitalization applies to stock markets as well as cryptocurrencies and blockchain projects. It tells us the current market value of a particular cryptocurrency or blockchain network. An equally important indicator is the total market capitalization of the entire crypto industry. In a sense, it can be used as an estimate of the total value of all blockchains and cryptocurrencies in the industry.
Calculating the market capitalization of a cryptocurrency project is relatively simple. While most stakeholders will compare the market capitalization of individual projects, it can also be useful to keep an eye on the big picture. The total value of all crypto assets is much greater than the value of just Bitcoin or Ethereum, despite these being the two largest projects by their individual market capitalization.
WHAT IS CRYPTORY MARKET CAPITALIZATION? Market capitalization, often shortened to “market cap,” is the current market value of a cryptocurrency network. It is calculated by multiplying the number of crypto assets in circulation by the price of the corresponding asset.
WHAT IS THE TOTAL MARKET CAPITALIZATION OF CRYPTOCURRENCIES? Total market capitalization reflects the total value of Bitcoin, altcoins, stablecoins, tokens, and all other crypto assets in the market combined. This indicator is considered important because it indicates the size of the industry as a whole. Due to the relatively high volatility of cryptocurrency markets, the capitalization value tends to change.
WHAT IS THE TOTAL CAPITALIZATION OF CRYPTOCURRENCIES USED FOR? The combined cryptocurrency market capitalization is often used as a basis for comparison with other sectors of the economy. For example, many analysts compare the overall market capitalization of cryptocurrencies with the market capitalization of precious metals or stocks.
Why do they do this? This characteristic provides a rough estimate of where and how the crypto market may grow in the coming years and decades. Comparing different financial markets is often futile. Different industries attract different types of investors. Cryptocurrency will not by default attract stock traders, currency traders and precious metals speculators. Cryptocurrencies are a new and thriving asset class and should be treated as such.
CONCLUSION. The market capitalization of cryptocurrencies is one of the important indicators to keep an eye on. It reflects the ebb and flow of the entire cryptocurrency industry. At the same time, it is important to take other indicators into account. Market capitalization is only part of the puzzle. There are other aspects of the industry that need to be examined before making any financial commitment.
