What Is Market Cap? How It's Calculated for Stocks and Crypto
Market cap is how much the market values a whole company or cryptocurrency. Here's how to calculate it and why a "cheap" coin that costs pennies can actually be very expensive.
The formula
Market cap = price × number of shares or coins in circulation. A company with 1 million shares at ₽500 is worth ₽500 million on the market.
Why the price of a single coin means nothing
Coin A costs $0.01, and coin B costs $100. It seems like A is "cheap" and has "room to grow." But if 100 billion A coins have been issued, its market cap is $1 billion, while B, with 1 million coins, has a market cap of $100 million. That means the market values A 10 times higher. You need to compare market cap, not price.
Large cap vs. small cap
| Large | Small | |
|---|---|---|
| Volatility | Lower | Higher |
| Liquidity | High | Often low |
| Risk of disappearing | Lower | Higher |
| Exposure to manipulation | Less | More |
The catch in crypto
- Circulating supply and total supply are not the same thing. If most of the coins are still locked up with the team, the supply will grow when they unlock.
- Market cap doesn't equal the money in the project. It's just the price of the last trade multiplied by the number of coins.
For stocks, market cap is used in valuation ratios like P/E; more in the lesson valuation ratios and stock screeners. Where to find company data is covered in the article where to find company data.
Aspiro Invest is a medium-term portfolio: what to hold, when to review it, and where the protective levels are.
- Market cap = price × number of units.
- Compare market caps, not the price of a single coin or share.
- Small cap means higher risk and volatility.
Frequently Asked Questions
Where can I check market cap?
For stocks, on exchange websites, your broker's app, and financial aggregators. For crypto, on aggregators like CoinMarketCap and CoinGecko.
What is fully diluted market cap?
It's the value counting every coin that will ever be issued. If it's much higher than the current market cap, many new coins will hit the market in the future.
Does a large market cap mean it's safe?
Safer than a small cap, but not risk-free. Large companies and coins can also fall sharply.
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