A Trader's Guide to Cryptocurrency Market Caps

Cryptocurrency market cap is the current price of a coin multiplied by its circulating supply, which is the number of coins considered to be in public hands. It gives a rough size for a coin and helps you compare projects. It does not show how much money was invested, how easy it is to sell, or whether the coin is safe. Different sites can show different caps for the same coin.

What is market cap?

The formula is simple:

Market cap = price x circulating supply

CoinMarketCap and CoinGecko both use this formula. CoinGecko’s methodology page states it as price times circulating supply. CoinMarketCap’s page does the same and adds a worked example.

Here is an example with made-up numbers. Say a coin costs $2 and has 50 million coins in circulation. Its market cap is $100 million. If the price moves to $3 and the supply does not change, the cap becomes $150 million.

Two things to notice. First, the cap moves with every price change, so any number you read is true only for the moment it was calculated. This is why this guide gives no live figures. Second, the price comes from recent trades, often small ones. A cap is not money that sits in a bank account. If many holders tried to sell at once, the price would fall.

Circulating, total and max supply

Supply is the hard part. There are three numbers you will see.

Supply type	Plain meaning	Used for
Circulating supply	Coins available to the public market	Market cap
Total supply	Coins that exist now, usually minus coins burned (destroyed)	Context, locked coin check
Max supply	The most coins that will ever exist, if the project sets a limit	Fully diluted valuation

CoinMarketCap calls circulating supply its best approximation of the coins in the market and in the general public’s hands. It compares it to public float in the stock market. Coins that are locked, held by insiders such as teams or private investors, or not sellable on the public market are generally not counted as circulating.

CoinMarketCap also makes a point that “circulating” is not the same as “freely tradable.” Its own example: tokens a project buys back from the open market are free to trade, but the industry usually does not count them as circulating.

What is fully diluted valuation (FDV)?

FDV is the maximum supply multiplied by the price. CoinMarketCap lists it as the highest of four ways to count “market cap”:

Measure	Formula (CoinMarketCap wording)
Fully diluted valuation (FDV)	Maximum supply x price
Minted market cap	Total supply (net of burns) x price
“Unlocked Market Cap” (UMC, CoinMarketCap’s term)	Circulating supply that is not locked x price
Circulating market cap	Public float x price

CoinMarketCap ranks coins by circulating market cap. It says “market cap” is used for several different metrics that share one label, so always check which one a site shows.

A big gap between market cap and FDV is worth noticing. It means many tokens are not yet in circulation. Those tokens may be released later, which adds supply. This is a fact to check, not a prediction of what the price will do.

How CoinMarketCap and CoinGecko calculate it

Both sites multiply price by circulating supply. The differences are in the inputs.

Price. CoinGecko says it collects price, volume and liquidity data from tickers on integrated exchanges. It builds the market price from a set of up to the top 600 tickers by volume for a coin. It removes outliers and takes a volume-weighted average price of the rest.

Circulating supply. CoinGecko says it gets the figure from token teams and verifies it. If it cannot verify the figure, circulating supply is marked with a “-” symbol. For tokens on smart contract platforms, it subtracts locked tokens from total supply, using locked wallet addresses supplied by the token teams. For proof-of-work coins, it queries a block explorer and includes pre-mined coins in circulating supply.

CoinMarketCap says it applies a verification process and will publish a verified figure only if it can confirm the data with reasonable confidence. It looks at trading venues, volume and liquidity to judge whether they fit the claimed cap.

Why the caps differ. Different price sources, different supply verification, and different decisions about locked coins mean the two sites can show different numbers for the same coin. Neither is “the true cap.” Check the source behind the figure and compare both before drawing a conclusion.

Why market cap can mislead

Thin liquidity

Price comes from recent trades. On a small market, a few trades can move the price a lot, and the cap moves with it. For example, a coin with a $500 million cap may not be able to absorb a large sale at anything near the listed price. Check trading volume and how many exchanges list the coin.

Locked and insider supply

If most tokens are locked or held by insiders, the circulating supply is small and the cap looks low. When those tokens are released, supply rises. A project can look small by market cap but huge by FDV.

Wrong or self-reported supply

CoinMarketCap states that many actors have a reason to inflate their circulating supply or market cap, which could push honest projects down its ranking. That is why both sites run verification, but no verification is perfect. A figure marked unverified deserves extra caution.

New or fake coins

A new coin can show a large cap after a few small trades at a high price. The FTC warns that scammers invent coins and tokens, and impersonate real businesses by claiming they have launched one. A big number on a price tracker is not proof that a coin is real. See our guide on how to spot fake cryptocurrency.

Stablecoins

For a stablecoin such as USDT, the market cap reflects how many tokens exist. It is a supply figure, not a sign of growth or of how safe the reserves are. See the USDT to PHP guide for how USDT is described by its issuer.

Market cap tiers

Traders often group coins as large cap, mid cap and small cap. There is no official cutoff, and the lines move over time, so we do not set dollar ranges here. The general idea is that a smaller cap usually means a less liquid market and larger price swings, while a larger cap usually means more depth. Neither guarantees a result.

Using market cap in practice

A short checklist for using the number well:

1. Check which cap it is. Circulating market cap or FDV?
2. Compare market cap to FDV. A large gap means more supply is coming.
3. Check volume. A cap with almost no volume is a weak signal.
4. Read the supply source. Is the circulating supply verified?
5. Check the date. A cap is a snapshot.
6. Use it with other facts. Team, code, listings and regulation all matter.

Market cap helps with screening and comparing size. It is not a buy or sell signal, and this is not financial advice. For unfamiliar terms, use the crypto dictionary, and for the basics of how coins are recorded, read blockchain explained simply. More guides are on the blog.