Market capitalization
Market capitalization multiplies the latest price by the number of coins or tokens. It is a widely quoted size measure in crypto — and an easily misread one.
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Market capitalization is price × supply. For a company, Investor.gov defines it as share price multiplied by shares outstanding [1]. In crypto it is the price times a coin’s supply; data providers differ on which supply they count — current, circulating or free float [2].
Key points
- 1Market cap = latest price × number of units counted.
- 2Which supply is used — current, circulating, free float or maximum — changes the result, sometimes a lot.
- 3Market cap is not the amount of money invested, and it cannot all be cashed out at that price.
How is market capitalization calculated?#
Investor.gov defines market capitalization for a company as “the current public market price of one share” multiplied by “the number of total outstanding shares” [1]. Crypto uses the same idea with coins instead of shares. Coin Metrics, for example, publishes a Market Cap based on the current supply, and an Estimated Market Cap computed as circulating supply × price, which it says “aligns with the industry convention” [2]. It also offers a free float version that excludes supply held by insiders and long-term strategic holders [2].
| Step | Value |
|---|---|
| Market cap = $2 × 50,000,000 | $100 million |
| Fully diluted valuation = $2 × 200,000,000 | $400 million |
| Share of maximum supply circulating | 25% |
| Price rises 10% to $2.20: change in market cap | +$10 million |
DefiLlama describes fully diluted valuation (FDV) as the expected maximum supply multiplied by price — a hypothetical market cap if all tokens were unlocked and circulating [3]. A large gap between market cap and FDV means many tokens are still to come.
What does market cap not tell you?#
Market cap values every unit at the latest traded price, even though only part of the supply actually trades at that price. It is not the money that went in, and selling a large share of supply would move the price — see liquidity. Regulators also warn that crypto prices can be highly volatile and that liquidity can be low [4]. For a measure based on the price at which coins last moved on-chain, see realized cap.
Which words are related?#
- Realized cap — values each coin at the price when it last moved on-chain.
- MVRV ratio — market cap divided by realized cap.
- Altcoin — any coin other than bitcoin, often compared by market cap.
Frequently asked questions#
Is a low market cap coin “cheap”?
No. Market cap says nothing about value or quality. A low price per coin can still mean a large market cap if there are billions of coins, and a small market cap can come with thin liquidity.
Why do websites show different market caps for the same coin?
They count different supplies — current, circulating or free float — and source supply figures differently. Coin Metrics notes that its own market cap includes supply held in escrow or foundation accounts, unlike some other sources [2].
What is fully diluted valuation?
The price multiplied by the expected maximum supply, as if every token were already circulating [3].
Sources#
Grade A = primary source (regulator, protocol specification, client code, original author). Grade B = expert secondary source used for explanation only.
- AInvestor.gov, U.S. Securities and Exchange Commission. Market Capitalization (glossary), 2026.
- BCoin Metrics Data Knowledge Base. Market Capitalization, 2026.
- BDefiLlama. Data Definitions (Fully Diluted Valuation), 2026.
- AEuropean Supervisory Authorities (EBA, ESMA, EIOPA). EU financial regulators warn consumers on the risks of crypto-assets, 2022.