【Crypto Education】Understanding Changes in Market Cap and Capital Inflows
A common way to calculate circulating market cap is:
Circulating market cap = token reference price × circulating supply.
This is the total valuation of circulating tokens based on the current price.
Here’s an example using hypothetical figures: Suppose a token has a circulating supply of 10 million tokens and a reference price of $1 per token. Its circulating market cap would be $10 million. If the circulating supply remains unchanged and the reference price rises to $1.10, the market cap would increase to $11 million—an increase of $1 million.
That $1 million represents a change in valuation. On its own, this difference cannot tell us how much money actually entered the market during that period. The formula applies the updated reference price to the entire circulating supply; it does not require every token to have traded at the new price. The prices and quantities above are hypothetical examples for educational purposes and do not represent any actual token.
How much trading can move the price also depends on liquidity. With different levels of order book depth, trades of the same size can cause different degrees of price movement. So when analyzing market cap changes, it’s also important to consider trading volume and liquidity data.
Another point that can cause confusion is the supply metric used. Circulating market cap typically uses circulating supply, while fully diluted valuation (FDV) uses metrics such as maximum or total supply. Check the data platform’s definitions for details. For the same asset, changing the supply metric will also change the valuation figure.
To understand what a market cap figure represents, consider the reference price, supply metric, and time of measurement together.
Sources: Binance Academy, CoinMarketCap methodology notes
https://www.binance.com/en/academy/glossary/market-capitalization
https://support.coinmarketcap.com/hc/en-us/articles/360043836811-Market-Capitalization-Cryptoasset-Aggregate
#加密知识 #MarketCap
A common way to calculate circulating market cap is:
Circulating market cap = token reference price × circulating supply.
This is the total valuation of circulating tokens based on the current price.
Here’s an example using hypothetical figures: Suppose a token has a circulating supply of 10 million tokens and a reference price of $1 per token. Its circulating market cap would be $10 million. If the circulating supply remains unchanged and the reference price rises to $1.10, the market cap would increase to $11 million—an increase of $1 million.
That $1 million represents a change in valuation. On its own, this difference cannot tell us how much money actually entered the market during that period. The formula applies the updated reference price to the entire circulating supply; it does not require every token to have traded at the new price. The prices and quantities above are hypothetical examples for educational purposes and do not represent any actual token.
How much trading can move the price also depends on liquidity. With different levels of order book depth, trades of the same size can cause different degrees of price movement. So when analyzing market cap changes, it’s also important to consider trading volume and liquidity data.
Another point that can cause confusion is the supply metric used. Circulating market cap typically uses circulating supply, while fully diluted valuation (FDV) uses metrics such as maximum or total supply. Check the data platform’s definitions for details. For the same asset, changing the supply metric will also change the valuation figure.
To understand what a market cap figure represents, consider the reference price, supply metric, and time of measurement together.
Sources: Binance Academy, CoinMarketCap methodology notes
https://www.binance.com/en/academy/glossary/market-capitalization
https://support.coinmarketcap.com/hc/en-us/articles/360043836811-Market-Capitalization-Cryptoasset-Aggregate
#加密知识 #MarketCap