Dan Parker | New money has come into the cryptocurrency market lately. If you are new to cryptocurrency trading, it is important to familiarize yourself with market capitalization to ensure that you make informed decisions.
What is market capitalization? Market capitalization, also known as market cap is a key consideration when ranking the size of a cryptocurrency. Market capitalization quantifies the value of a cryptocurrency. To calculate the total value of a cryptocurrency, you will need to multiply the price per coin by the total number of coins in circulation.
Let’s look at 5 tips to using a market cap calculator.
- Determine The Price Of The Cryptocurrency
When using a market cap calculator, you will need to determine the current price of the particular cryptocurrency. The price a cryptocurrency last traded at is the current market price. This price is usually calculated by using the weighted average of all the prices that are recorded on major markets. You can find these prices in the market section of each cryptocurrency.
- Establish The Circulating Supply
Circulating supply is an approximation of the number of coins in circulation. Circulating supply is a good metric used to establish market capitalization. This is because coins that are either locked or reserved do not affect the market price and therefore they should not be used when calculating the market cap.
- Multiply The Value Of The Cryptocurrency By The Price Per Coin
When using a market cap calculator you will need to multiply the circulating supply of the cryptocurrency by the price of a coin. For example to determine the bitcoin market cap you will need the number of bitcoins in circulation multiplied by the value of a single bitcoin. The market cap is the total money you will get if you sell all the bitcoins at the current market price. An important thing to note is, for some cryptocurrencies large numbers of coins are controlled by very few wallets.
- Compare The Market Caps For Different Cryptocurrencies
As a trader, it is very important to compare different market caps for different cryptocurrencies. Bitcoin is one cryptocurrency that is doing really well right now. The price increase is impressive. However, it is important to compare its performance with market capitalizations for other financial assets and ascertain the difference between them. This will help you get a clear picture of who is dominating the market.
- Find A Website That Can Accurately Calculate For You
Technology has come a long way. Nowadays, there are several sites that are specially designed for people looking for a market cap calculator. These websites come in handy are a useful tool when you need to quickly calculate the market cap of a cryptocurrency. All you need to do is enter the current price and the circulating supply and the rest is done for you. This will ultimately save you from the time-intensive calculations especially if you want to calculate the potential value of several cryptocurrencies.
I do hope that these 5 tips will come in handy when using a market cap calculator. marketcapcalculator.com has the best calculator tool for cryptocurrencies. Discover this market cap calculator for crypto and take advantage of this great tool.