Classification of Crypto Assets Based on Market Cap
There are four categories in market capitalization that are used to classify cryptocurrencies on crypto exchanges. This classification will make it easier for you to compare the total value of one cryptocurrency with others, thereby making more informed investment decisions.
The four categories classified in market capitalization are as follows:
Large-cap
Large-cap cryptocurrencies or cryptocurrencies with large capitalization are generally considered the safest crypto investments. Cryptocurrencies are categorized as large-cap if the market capitalization value is more than 10 billion US dollars.
Investing in large market cap cryptocurrencies is the most common strategy to undertake. Because currencies in this category have a proven long-term track record. The level of security is also adequate and in terms of value it can be counted as a big player in the crypto world.
In addition, large-cap cryptocurrencies have high liquidity. This means that you can find this asset on almost every cryptocurrency exchange and they have a high trading volume. High liquidity makes it easy for investors to enter and exit.
The types of cryptocurrencies that fall into this category are Bitcoin and Ethereum.
Mid-cap
This cryptocurrency, which is included in the middle category, has a market capitalization of between 1 billion and 10 billion US dollars. Types of currency in the mid-cap category are generally considered to have profit potential that has not been fully exploited and are at higher risk.
In general, mid-cap cryptocurrencies tend to perform well over the long term. By including them in your portfolio, these medium category currencies can increase asset diversification for the better. However, keep in mind that not all coins in the mid-cap category have the potential to become large-cap.
Examples of currencies that fall into the mid-cap category are Litecoin, Cardano, and Monero.
Small-cap
Coins and tokens that fall into the small-cap category are those that have a market capitalization of between 100 million-1 billion US dollars. Cryptocurrencies in this category are highly volatile and are considered very risky investments. Although sometimes it has a lot of growth potential in the short term.
An example of a digital currency from this category is Dogecoin.
Micro-cap
Cryptocurrencies that fall into the micro category are certainly riskier than small-cap currencies. Usually those that fall into this category are those that have just been launched by some anonymous person or group and have a market capitalization of less than 50 million US dollars.
