How to Use Coinmarketcap: The Best Coin Market Cap Tips and Tricks
Coinmarketcap is one of the most popular websites in the crypto space. The website tracks the market capitalization of various cryptocurrencies in a user-friendly and transparent way.
Coinmarketcap gets its real-time data from multiple exchanges, making it easy for users to track price information for thousands of digital tokens.
If you’ve spent more than 10 minutes Googling crypto-related terms online, you’ve probably stumbled on Coinmarketcap. Today, we’re going to explain how to get the most out of Coinmarketcap, tips for maximizing the Coinmarketcap experience, and how today’s top crypto experts use Coinmarketcap to extract valuable data.
- Provides information, statistics, and charts for thousands of cryptocurrencies
- Connects directly to exchanges to track real-time prices
- Is trusted across the internet for providing unbiased information about various crypto and blockchain projects
- Maintains ‘profile pages’ for each cryptocurrency with links to the official website, forum threads, and other information
- Ranked in the top 500 websites worldwide (currently ranked 481 by Alexa in April 2019)
Most crypto users already know Coinmarketcap is an influential platform. But do you really know how to get the most from Coinmarketcap? Keep reading to find out everything you need to know about using Coinmarketcap to its full potential.
Key Terms Used on Coinmarketcap
When you visit the front page of Coinmarketcap.com, you’ll find a standard, information-packed design. Coinmarketcap doesn’t overwhelm users with flashy images or futuristic website design. Instead, it lists thousands of cryptocurrencies in a no-nonsense way. Some of the key terms you’ll see on the front page of Coinmarketcap include:
Market Cap: Market capitalization; the total value of all circulating cryptocurrencies combined.
24h Vol: 24 hour trading volume; the total value of all cryptocurrency sold in the past 24 hours.
BTC Dominance: Bitcoin’s market cap as a percentage of total crypto market cap. In recent years, bitcoin’s market dominance has hovered between 50% to 60%.
Cryptocurrencies: The number of cryptocurrencies tracked by Coinmarketcap. As of April 2019, Coinmarketcap tracks 2,131 cryptocurrencies.
Markets: The number of cryptocurrency pairs tracked by Coinmarketcap, or the ‘markets’ where you can buy or sell a particular cryptocurrency.
Cryptocurrencies: The list of 2100+ digital tokens, cryptocurrencies, and blockchain-based coins in the crypto community today.
Exchanges: Cryptocurrency exchanges where individuals can buy and sell cryptocurrencies. Coinmarketcap ranks exchanges by trading volume, making it easy to see which exchanges have more liquidity than others.
Price: The current price of a cryptocurrency.
Volume (24h): The total value of a particular cryptocurrency traded in the past 24 hours.
Circulating Supply: The total number of units of a digital token released to date. Bitcoin has a circulating supply of around 17.6 million out of a total of 21 million total bitcoins that can ever be created.
Change (24h): The percentage by which a digital token has risen or fallen over the past 24 hours.
Price Graph (7d): A visual chart of a cryptocurrency’s price movements over the past seven days.
Watchlist: Coinmarketcap lets you setup a ‘watchlist’ to monitor specific cryptocurrencies.
USD: Coinmarketcap lets you denominate its prices and market cap in USD and a number of other currencies, including BTC, ETH, XRP, BCH, and LTC.
Next 100: By default, Coinmarketcap displays the top 100 cryptocurrencies by market cap. You can click ‘Next 100’ to view the next 100 biggest cryptocurrencies by market cap.
View All: View all 2,100+ cryptocurrencies tracked on Coinmarketcap.
Now that we’ve covered the basic terms used on Coinmarketcap, it’s time to dive deeper into how to use Coinmarketcap.
How Coinmarketcap Gets Accurate Coin Metrics
If you click on a coin on Coinmarketcap, you’ll visit that individual coin’s dashboard. You can view basic metrics for that coin, including market capitalization, trading volume, price in USD/BTC/ETH, circulating supply, total supply, and maximum supply, and chart data.
Coinmarketcap gets this data by integrating directly with multiple cryptocurrency exchanges. By tracking real-time data from multiple crypto exchanges, Coinmarketcap prevents a dip or surge on one exchange from affecting the rest of the market.
Coinmarketcap has published an extensive guide explaining how they calculate coin information.
How to Get Your Coin or Exchange Listed on Coinmarketcap
Coinmarketcap is the definitive source for crypto exchanges and coins online. Getting listed on Coinmarketcap is a big deal. However, Coinmarketcap doesn’t just list any cryptocurrency or exchange.
Anyone can launch a blockchain-based token. You can create an ERC-20 token even if you know nothing about coding, for example. Coinmarketcap doesn’t track every blockchain-based token that has ever been created. Instead, Coinmarketcap tracks any serious token projects, including major and minor projects based on all types of blockchains.
Want to get your coin listed on Coinmarketcap? Here are some tips recommended by Coinmarketcap:
- The only way to request a coin or exchange listing on Coinmarketcap is to use this online form. Coinmarketcap will not respond to requests on social media, email, and other channels. You can only use that online form.
- Coinmarketcap claims to “evaluate many other factors besides the basic criteria when deciding to add a new listing”, including all of the following:
- Community interest, because “a project’s usefulness is largely a function of its adoption by its community and user base”
- Trading Volume, because “trading volume and liquidity help with establishing a market price for users to acquire and sell cryptocurrencies”
- Uniqueness, because Coinmarketcap doesn’t want to encourage crypto projects to copy one another; instead, Coinmarketcap wants to encourage projects “with unique and interesting characteristics” capable of pushing forward the crypto ecosystem as a whole
- Age of the project; Coinmarketcap claims to “prefer to list projects that have stood the test of time” instead of projects that have just recently launched
- Avoid sending multiple requests to Coinmarketcap or asking for status updates; Coinmarketcap claims this delays the process further
- Coinmarketcap never charges for listings; if a third party service claims to charge a fee in exchange for getting listed on Coinmarketcap, then it may be a shady company
- Do not offer to pay Coinmarketcap large amounts of money for advertising in exchange for listing your project, because it “will also not improve your chances of getting listed”
- Coinmarketcap recommends projects focus on organic growth prior to seeking a listing on Coinmarketcap; inflating a project’s trading volume, social media metrics, traffic, and community interest will not increase your chances of getting listed
Ultimately, Coinmarketcap understands that getting listed on its site is a big deal. That’s why they take their role seriously. They don’t just list any token or exchange: they strive to list only legitimate projects with strong community interest.
Of course, Coinmarketcap also attracted notoriety for listing controversial, pyramid scheme tokens like Bitconnect Coin (BCC), which undoubtedly helped the scam grow even further.
You can view other Coinmarketcap listing recommendations here.
Understanding Coinmarketcap Graphs
Clicking on any particular cryptocurrency on Coinmarketcap will take you to a graph of that cryptocurrency’s price movements over a chosen period of time.
Some tips for understanding Coinmarketcap graphs include:
- You can change the time period of the graph; you can select a specific range of dates (like April 5 to April 13), or you can choose a time period like 1d, 7d, 1mo, 6mo, 1y, YTD, or all
- View prices in USD, BTC, or ETH (available for most coins, with USD displayed by default)
- Check the box at the bottom to include or exclude the market cap and 24 hour volume
- Change the view to a linear or log graph; the linear view is easier to read and is better for beginners, although some prefer a log graph for its more accurate overview
Understanding a Coin’s Profile Page
On Coinmarketcap, each coin has its own profile page. That profile page features the price of the asset, its current market cap, supply information, and more. Here’s a basic overview of what you’ll find on a coin’s profile page:
Rank: The market cap ranking of a particular coin; bitcoin has a ‘1’ ranking because it’s the largest cryptocurrency by market cap
Website: A link to the official website of the cryptocurrency, if available (bitcoin’s page redirects to bitcoin.org)
Explorer: A blockchain explorer tool you can use to scan transactions on that particular blockchain; the bitcoin ‘Explorer’ link takes you to Blockchain.info, for example
Explorer 2, 3, etc.: Additional explorers for that particular blockchain
Message Board: The most popular forum for discussing that cryptocurrency (bitcoin goes to BitcoinTalk.org, for example)
Source Code: A direct link to the source code of a particular blockchain or cryptocurrency (bitcoin’s source code can be found at Github.com/bitcoin, for example)
Technical Documentation: A link to the whitepaper or similar documents explaining how a cryptocurrency or blockchain works (bitcoin’s link directs to the original Satoshi Nakamoto whitepaper, for example)
Tags: Coinmarketcap adds different tags to different cryptocurrencies, including tags like ‘Mineable’ and ‘Coin’ for bitcoin or ‘Token’ for Binance Coin
Social: Links to recent social media posts about a particular coin (typically taken from Reddit)
Tools: A tool that lets you add a widget featuring that coin to your own website
Ratings: Various ratings of a particular coin, including the Fundamental Crypto Asset Score (FCAS) and other ratings published by third parties
Historical Data: The price, trading volume, and market cap data for any particular date in the entire history of a cryptocurrency
Buy: Links to an exchange where you can buy a particular coin.
Exchange: Links to a marketplace where you can buy or sell a particular coin.
Wallet: Links to a storage system for a particular coin.
Crypto Loans: Links to lending platforms for a particular coin.
For the last four links, Coinmarketcap appears to charge a fee to certain providers. If you want to be the first thing that pops up when you click the ‘Buy’ button on the bitcoin page, for example, then you can pay Coinmarketcap a fee.
Using Coinmarketcap to Find the Best Exchanges
Coinmarketcap tracks the trading volume on cryptocurrency exchanges around the word. You can sort through exchanges based on their 24 hour trading volume, their number of listed token pairs, their adjusted trading volume, and more.
Visit Coinmarketcap and click the ‘Exchanges’ tab, then select ‘Top 100 by Adjusted Volume or ‘Top 100 by Reported Volume’.
With most exchanges, ‘adjusted volume’ and ‘reported volume’ are identical. Coinmarketcap will adjust the volume of some exchanges, however, based on their own data. Some exchanges fabricate trading volume, for example, and Coinmarketcap does its best to prevent this. This is particularly common on smaller exchanges seeking to make a name for themselves.
Need help picking an exchange? Look for the exchange on Coinmarketcap’s list. You can find the number of markets on that exchange along with the exchange’s trading volume.
Suspect an exchange’s trading volume is largely fraudulent? Compare the adjusted volume and reported volume on Coinmarketcap to make sure.
Generally, exchanges with higher trading volume are preferred. An exchange with higher trader volume has more liquidity, which means it will be easier to make a trade on that exchange.
What’s the Difference Between Adjusted Volume and Reported Volume on Coinmarketcap?
Coinmarketcap tracks adjusted volume and reported volume. A recent report found that major exchanges fake approximately $6 billion in daily crypto trading volume. Over 70% of the top 100 exchanges on Coinmarketcap were caught faking trading volume.
An exchange might trade $1 million of bitcoin from one wallet to another, for example, making it look like real customers traded $1 million on that exchange. In reality, the exchange is just trading with itself. Some exchanges do this to make themselves look more legitimate and trustworthy. Others do this to prop up lagging liquidity.
In any case, Coinmarketcap tracks reported volume and adjusted volume:
- Reported volume is the total value of all trading activity reported by the exchange
- Adjusted volume is the estimated actual trading volume generated by real traders on the exchange
It’s also important to remember that Coinmarketcap doesn’t track volume on exchanges with no fees. Coinmarketcap excludes no-fee crypto exchanges from its trading volume because it’s easy to fabricate trading volume. With no trading fees, you can trade coins back and forth with one another without penalty. Instead of trying to determine the actual trading volume, Coinmarketcap just refuses to track trading volume on no-fee crypto exchanges.
How to Use Coinmarketcap to Find a Place to Buy a Specific Crypto
Having trouble finding an exchange where you can buy a specific cryptocurrency? Coinmarketcap makes it easy to find the right market:
Step 1) Open Coinmarketcap and search for the coin
Step 2) Click on the market tab, which displays all exchanges and trading pairs for that coin
Step 3) Check prices on various exchanges, then choose your desired exchange
You can find people posting questions on Telegram, Reddit, or Twitter asking where to buy a specific coin. This is risky. Someone might respond with a fake link or recommend a bad exchange. In most cases, Coinmarketcap is the safest place to get the answer.
Using Coinmarketcap to Find the Official Project Website and Forum Thread
You can use Coinmarketcap to avoid scams and phishing schemes. Coinmarketcap lists the links to the official project website, the official forum post, and other crucial information.
Often, Google can’t be trusted in the crypto community. A phishing website might appear first when you Google a major exchange or cryptocurrency, for example.
As far as we can tell, Coinmarketcap has never exposed users to fake links, nor has the website ever been hacked. You can trust the links on Coinmarketcap.
Not sure which website is the official website? Check Coinmarketcap.
Create a Watchlist Using Coinmarketcap
Coinmarketcap lets you create a watchlist to track different coins. Interested in buying a coin? Want to monitor a new coin’s price movements? Add it to your watchlist. You won’t have to manually search for the coin every time.
To add a coin to your watchlist, visit a coin’s profile page, then click the ‘Watch’ button under the price of the coin.
You can also add coins to your watchlist directly from the list of coins by clicking on the ‘…’ icon beside each coin.
Personally, I use the watchlist to easily keep track of my portfolio. You can check your portfolio at a glance to see how your coins performed.
Monitor the Biggest Gainers and Losers of the Day
Coinmarketcap lets you see the biggest gainers and losers in the market based on their recent movements.
Want to catch a coin before it really takes off? Sometimes, a coin with a small market cap can surge 1,000% in a short period of time.
Sometimes, this is the sign of a pump and dump scheme on an obscure coin. In other cases, it’s an early indicator of a coin that’s about to take off.
If you see a coin at the top of the gainers list with significant volume, then it may be worth taking a closer look.
You can view the list of Coinmarketcap’s biggest gainers and losers here. You can check the biggest gainers and losers in a 1h, 24h, or 7d period.
Use the Coinmarketcap Cryptocurrency Conversion Tool
Coinmarketcap’s cryptocurrency conversion tool is very useful. With fiat currencies, you can usually type an exchange rate into Google and get instant exchange rate information.
With cryptocurrencies, you can’t do that. Google lets you convert major cryptocurrencies like BTC and ETH into USD, but more obscure cryptocurrencies aren’t available.
Thankfully, Coinmarketcap has a currency converter that lets you easily convert any cryptocurrency to a fiat currency or other cryptocurrency.
You can find the Coinmarketcap currency conversion tool here.
Find Upcoming Crypto Events Using the Coinmarketcap Events Calendar
Coinmarketcap has a list of upcoming cryptocurrency events and conferences. It’s one of the internet’s most comprehensive resources for all types of crypto and blockchain events – including both large and small events taking place all over the world.
You can view the Coinmarketcap list of upcoming crypto events here.
All types of people go to crypto events, including members of the crypto news media, employees of blockchain startups, entrepreneurs, CEOs, programmers, you name it! Even ordinary cryptocurrency users will attend crypto events. Consider checking the Coinmarketcap list and attending an event near you.
Use Coinmarketcap to Discover the Price of Any Crypto on Any Date
How much was bitcoin worth on April 3, 2013? You can use Coinmarketcap to answer that question.
Each coin on Coinmarketcap has a ‘Historical Data’ section that features a day-by-day breakdown of a cryptocurrency’s price movements over time, including its opening price, high price, low price, and close price over any given 24 hour period (in UTC).
You can always use the Coinmarketcap chart to find price information for a token. The Coinmarketcap Historical Data section, however, works great for finding the price of a coin (or the market cap and trading volume) on any specific date.
Use Coinmarketcap to View Historical Market Data
Want to see what the front page of Coinmarketcap looked like 5 years ago? Coinmarketcap has a ‘Historical Snapshots’ feature that gives you an overview of crypto markets on any specific date.
You can choose a date, then check coin rankings for that date.
If you go back to June 2, 2013, for example, you’ll see that bitcoin was priced at $122.29 with a market cap of $1.37 billion. Litecoin was a distant second place with a price of $2.73 and a market cap of $49.6 million. Namecoin, Peercoin, and Novacoin rounded out the top five list.
Only 14 coins are listed on Coinmarketcap on that date. It’s crazy to see how things have changed.
Using the Coinmarketcap API
The Coinmarketcap API is one of the most popular APIs in the crypto community. The API comes with plenty of documentation and support, making it easy to integrate into your setup.
You can use the Coinmarketcap API to backtest trading strategies, for example. You can also use the API to pull market data or check historical prices.
The Coinmarketcap API is available for free by default. However, there’s also a premium plan allowing for granular tick data, allowing more advanced traders to take advantage of Coinmarketcap’s data.
The Coinmarketcap Blog: Quality Over Quantity
The Coinmarketcap blog is updated just 5 or 6 times per year. Coinmarketcap will often go months without uploading a new blog post. If Coinmarketcap has nothing to say, then they won’t say it.
One of the best parts of the Coinmarketcap blog is the ‘According to Coinmarketcap’ post uploaded once a year. The 2018 edition of the post shared interesting numbers from the last year of crypto, including the rise and fall of crypto in 2018 and the dramatic turns of major cryptocurrencies. It’s a lengthy and detailed blog post exploring all aspects of the crypto space.
The Coinmarketcap blog is always worth a read.
Other FAQs About Coinmarketcap
When Does the ‘24h Time’ Roll Over on Coinmarketcap? Coinmarketcap’s 24h time is based on the current time. It’s a rolling 24 hour period.
What Time Zone Does Coinmarketcap Use? Coinmarketcap uses the UTC time zone for all data unless otherwise specified.
What Does a Question Mark Mean Under Supply or Market Cap for a Cryptocurrency? Some cryptocurrencies have a question mark displayed under supply or market cap. In this case, Coinmarketcap is unsure about specific details about a blockchain project. Coinmarketcap has not independently verified the circulating supply and market cap for a cryptocurrency, for example. This is particularly common for smaller blockchain projects.
Who Owns Coinmarketcap? Coinmarketcap was founded in 2013 to track cryptocurrency prices. The company is officially headquartered in Dover, Delaware. Coinmarketcap is an independent, privately-owned company. The site was founded by Brandon Chez, a 32-year old programmer from Queens, New York. Chez keeps a low profile, and there was limited information about him available online until the Wall Street Journal ‘exposed’ him in 2018.
Ultimately, Coinmarketcap continues to be one of the most influential websites in the crypto community today. Using the tips above, you can get the most from Coinmarketcap.
More Coin Market Cap Tidbits to Chew On
By now, you know Market Cap is short for “Market capitalization,” a term that points to the value of a traded asset. Cryptocurrencies likewise have market caps, a measure of the current value and size of a particular cryptocurrency. If a coin or token has a relatively high market cap, it is naturally bigger than other altcoins in the market. As an illustration, bitcoin is the largest cryptocurrency at the moment, based on its market capitalization.
Calculating market cap is relatively simple, and is determined by multiplying the spot or current trading price with the total circulating supply. Continuing with the bitcoin example, one bitcoin is currently worth $6,612. Rounding up to simplify this example, it can be said that there are 18 million bitcoins in circulation.
In addition, bitcoin has a market dominance sitting at around 40 percent. What this means is that bitcoin’s value comprises around 40 percent of the whole cryptocurrency market.
Market Capitalization: Market Price
The market price of an altcoin refers to its price according to current market rates, seen on various exchanges. Simplified, a digital coin’s price is that which buyers and sellers agree upon in an open market. Complicating things slightly is that different exchanges peg different prices on bitcoin. Different trading pairs will also impact price, as does the simple matter of where in the world the country snapshot price is taken.
It’s demonstrably true that bitcoin prices are not consistent across exchanges and countries at any particular moment in time. This happens because of differences in supply and demand, the fundamental dynamic at play when any asset is traded, digital assets included.
The logical and usual route to pegging an asset’s price is to employ an aggregated price. This is simply the average of all prices, collected across different exchanges around the world at that moment in time.
Market Capitalization: Circulating Supply
The circulating supply of any currency refers to the number of coins in global circulation. Circulating supply is different to the total supply, especially with cryptocurrency. At the time of writing, there are 17,106,787 bitcoins in circulation. The maximum final “mint” of bitcoins will be 21 million, based on its original setup and mining protocols.
New bitcoin will be generated while mining continues, until the last coin is released to total 21 million. At that moment, bitcoin’s total supply will equal circulating supply. Many altcoins come pre-mined, which means that the full supply of tokens is available to the system at the outset.
In the majority of new cases, this is the model employed, and these altcoins arrive with a total supply equivalent to their circulating supply. There’s an understandable tendency for traders to look at an altcoin and attribute a value to it based solely on its current price.
Altcoins priced in cents attract those who hope to see it rise massively in value over the short term. There is, however, another critical factor to contemplate when assessing any digital currency, and that is its circulating supply. For example, Ripple is priced at $0.485, a fraction of, say, Litecoin’s current price of almost $80.70. if a trader views both coins’ prices, they might bank on Ripple rocketing upwards, whereas Litecoin seems far more “settled” and unlikely to gain in dollar bites.
In reality, however, Litecoin’s prospects are in fact far more favorable. This is so because Litecoin has a circulating supply of but 57 million coins, far less than Ripple’s 39 billion! To equate Ripple’s market cap, Litecoin will have to quadruple in value. But Litecoin’s true value for an investor may present differently when circulating supply is factored in and given correct weight in appraising the coins. It remains important to look at market cap and aspects like circulating supply – as opposed to just price – in order to legitimately evaluate a cryptocurrency.
Total Market and Individual Market Capitalization
Two metrics are important when looking at market capitalization in the cryptocurrency market. The first would be the market capitalization of each cryptocurrency. This metric deals with individual digital coin caps, and with the maturation of the cryptosphere, sites like CoinMarketCap are a click away and detail all current token caps worth noting.
Altcoins are typically ranked according to their market cap, as it’s an informative tool with which to analyze investments. A coin’s market cap is essential when assessing any particular coin, or when comparing altcoins.
Users wanting a big picture of the overall market would look at the second industry market capitalization metric. Here the total market capitalization of the cryptocurrency industry is gauged.
Total market cap indicates the value of the whole cryptocurrency market. With thousands of cryptocurrency tokens now afloat, the total market cap is that of all existing altcoins. The total market cap of the cryptosphere currently stands at $267,802,000,000.
Market Cap Importance and Use
Using a coin’s market cap to determine investment value is nuanced and not quite as simple as many make it out to be. Financial theory typically posits that the bigger an altcoin, the slower will be its subsequent growth rate. This is based on legacy blue chip analysis, and not always appropriate in the world of digital coins. Similar to theories punted by penny cap investors, a newly minted altcoin should find it far easier to triple or more in price as opposed to a market leader like bitcoin.
This has to be traded off against the equally real prospect of a new coin not experiencing uptake and falling in price shortly after release. Hence, while bitcoin has time and huge global favor on its side, it cannot hope for a novelty window that jumps its price dramatically anymore. On the other hand, a new crypto token might be able to rapidly gain in value, yet it has its novelty and market competition to deal with, and therefore there are no guarantees either.
Lower market cap coins are also open to abuse by traders and especially whales (large-scale investors). It’s easy for some to manipulate lower-cap coins as they are still in their infancy. There is no history nor many case studies that afford the coin respectability among global investors.
A bugbear of regulators the world over, this kind of market manipulation is symptomatic of the problems legislators seek to address, as these practices are dark in legacy investing too. It follows logically that such attempts directed at bitcoin would be useless, as the project has a much higher value and trading volume. Attempting to manipulate the bitcoin market would involve vast sums of money and is, for all intents and purposes, not possible – or certainly not effective or worthwhile trying.
Viewing Market Cap Correctly
As has been shown above, market capitalization cannot be the only tool employed by any diligent investor, yet it also cannot be left out of any serious analysis. Market cap opens the door to a comprehensive and best-possible analysis of a digital currency. Viewing any metric or other indicator in isolation cannot give a trader the big picture.
Market cap is typically an indication of the size or value of an altcoin. Cryptocurrency investment is still an extremely volatile space, and investing in any digital currency by looking at any one singular metric is a recipe for getting it wrong. Current price, market cap, circulating supply and future supply-and-prospects all need to be seen together before a cryptocurrency can be evaluated.
Here’s Why Market Cap Is A Key Factor In Crypto Business
“Market cap” is shortened from “market capitalization”. It’s a term used in the stock market. In crypto business, this term describes the market value of a cryptocurrency. It’s an important way to measure and estimate cryptocurrency. Using market cap, it’s possible to compare different crypto coins more accurately.
It’s easier to understand why the market cap is important if we see it through an equation.
Crypto Market Cap = Current Market Price of Cryptocurrency x Circulating Supply*
*Circulating supply is a total number of certain cryptocurrency coins in the market.
Comparing to the stock market, where the market cap describes a total number of stock shares multiplied by their current price, the equation for the crypto market cap looks like this:
Crypto Market Cap = Total Number of Circulating Coins x Current Coin Price
To make good investing decisions, you would want to know the total value of the company. To calculate the total value of the company, you need to multiply all the company’s shares with its current price. It’s the same in crypto business. The price of a token alone is not enough information to make good crypto investing decisions.
Let’s say that there is a new cryptocurrency A. The price of A is 0.50 dollars and it has a total supply of 40 billion. If we want to calculate the market cap of a new cryptocurrency, we should multiply the price of the coin (0.50) with a total number of coins (40 billion).
That means the market cap of the new cryptocurrency A is 20 billion dollars.
Let’s then say there is another cryptocurrency B. The price of B is 50 dollars and it has a total supply of 84 million. That means cryptocurrency B has a market cap of 50*84 000 000 = 4 200 000 000 dollars.
When you compare the cryptocurrencies A and B only by their coin price, you would think that B is better because its 100 times more expensive than A. But, when you look at the total supply, cryptocurrency A has a much bigger total number of coins than B. That’s why the market cap of cryptocurrency A (20 billion) is much bigger than B’s (around 4 billion).
What will happen if B’s price increases? Due to the larger number of coins, it could have a higher market cap than A. Also, if the total supply increases and the price stays the same, B could have a higher market cap than A.
Total Supply or Max Supply instead of Circulating supply
It’s possible to use other measures instead of Circulating supply to calculate market cap.
Total supply is the term that describes a total number of coins in existence. That also includes coins that are somehow locked or not for sale yet. Max supply is the total number of cryptocurrency coins that could possibly be created.
Cryptocurrency investors use Circulating Supply most often because it describes only the coins available to everyone in the public market. This gives better measures of the market cap.
A common mistake
The market cap and the total amount of money invested are not the same. Market cap does not reflect the total number of fiat currency that investors put in digital tokens.
Example 1. Let’s say that an investor buys only one crypto coin of a cryptocurrency that has a price of 1 dollar and a supply of 20 million. Market cap would remain 20 million even though there is only one dollar invested in coins.
Example 2. Let’s say that everyone suddenly started grabbing the crypto coins at once. Increased demand increases the price, that also increases the market cap. Let’s say that everyone started selling their crypto coins at once. The price of the coin would suddenly fall and the total amount of money people could get would be less than the market cap was.
In 2017, a well-known company JP Morgan showed a difference between Bitcoin market cap and fiat money invested in Bitcoin. They said that investors put 6 billion dollars in up to 2009 and the total market cap was 300 billion. So, every time an investor puts 1 dollar in Bitcoin, the market cap grows for 50 dollars.
CoinMarketCap: A Handy Cheat Sheet for the World's Most Popular Crypto Website
Ask any newbie to the crypto scene what the first website they found when searching for bitcoin prices and they will invariably answer you with CoinMarketCap (CMC). It's no wonder, as it is possibly the largest website when it comes to cryptocurrencies. It is relied upon by many traders to make judgment calls, by journalists looking to do research and is the perfect entryway for someone who knows nothing about cryptocurrencies to get a feel for what's what in crypto land.
CMC provides good information about all possible cryptocurrencies, as well as offering charts and statistics to boot. It strikes a balance between accuracy and breadth of detail – there have been mutterings that exchanges feed bad information to the site, but that is another topic entirely. It is also the most popular website according to Alexa. It currently stands at number 481 most popular website on the entire internet.
So… it's pretty useful and pretty important. That said, there are many out there who don't know how to use CMC to its full potential, and many have been using it for years while only scratching the surface of what it can be used for. Let's take a look at the following tips to help you get the most out of this precious online resource.
Global Market Metrics
Look at the very top of the homepage of CMC. This is the global market indicators and they are an invaluable tool that many simply ignore when first landing on the page. It's always a quick scroll or searches to find a favored cryptocurrency that people want to keep tabs on.
The global market metrics allow you to take the pulse of the market at any point in time. Showing how many cryptocurrencies there are, how many markets there are, what the current overall market cap is and the trading volume over the last 24 hours. There is also one more key metric they provide at a glance. It is BTC Dominance. This is the market cap of Bitcoin compared to the market cap of all other coins put together. This metric alone is good to have on hand, to see where the market is going in terms of independence fro the big one.
Click on a coin and you will be given a plethora of information. The market cap of the coin, the trading volume and price are all available at a glance. Dig a little deeper and you'll be able to see some metrics on the supply of the coin in question. Circulating supply, total supply, and maximum supply. Those three are extremely important to see how any single is faring and to put news about the coin into perspective. Then there are the charts, which can be customized at all sorts of data points.
CMC has provided exchanges with reliable and fast integrations so that anything you see is what is happening in the market right with a minimum of delay. This is amazing, as it's not everyone that can pull data from hundreds of exchanges and thousands of different coins in a manner that seems so easy. The system they have built is genuinely robust and is one of the reasons why so many people choose CMC as their price watching software of choice.
Research Almost All Currencies
While not every currency is listed on CMC, the vast majority are. This is especially important when you take into consideration that new coins are being made every day. While other platforms might have certain coins that CMC does not have, it's a sure bet that CMC will win out over any competitor due to the sheer weight of the numbers it does have.
Good Links For Education
One of the key aspects of CMC's system is that they are not only there to show you the prices and carts of each specific coin. They provide links as well. Anyone who is new to the industry can use the links section under the rank (on the left side) to read whitepapers, go to the official website of the coin, find a technical documentation and much much more.
Find The Right Exchange
Cryptocurrency exchanges live and ie by their liquidity. The more liquid an exchange, the better your prospects are to buy/sell coins at a consistent price. CMC allows you to view the top 100 exchanges based on their volume. They have various options to filter and sort exchanges so when you need to find the right place to do your trading… you really only need to look at one place.
According to studies published by respected independent researchers, the actual market cap of a cryptocurrency may in fact be “as little as 5 percent” of its officially reported value. In this regard, it should be pointed out that one of the world’s leading market data websites ‘Coinmarketcap’ (CMC) has often been accused of providing its users with false/misleading crypto exchange figures.
With that being said, a number of new websites have now taken matters into their own hands and have decided to present investors, crypto enthusiasts with real-time data that reflects the true value of a cryptocurrency.
Is Coinmarketcap Losing its Market Dominance?
Over the course of the past few years, Coinmarketcap has been able to gain a massive foothold over the global cryptocurrency market — primarily by incentivizing exchanges to inflate their reported trading volume.
As many of our readers might be well aware of, CMC ranks exchanges using their reported as well as adjusted volume. However, despite all this, the issue of fake volume remains quite obvious— with the folks over at Bitwise claiming that the actual size of the global cryptoconomy is just 1/20th of its reported value.
In response to this mess, market data providers such as Messari are trying to create a system where users can procure “real figures that have not been inflated even in the slightest”. For example, Messari’s native UI features an option called Onchainfx that has been designed to provide users with “real-time 24-hour market data associated with the top-10 altcoins present in the market today”.
CMC is Deliberately Not Acting on the Above Stated Issues
According to a spokesperson for Coinsbit — a CMC listed fiat-crypto exchange — it is essentially the duty of every exchange to monitor its activities and stay away from unethical practices that artificially inflate the trade volume of different altcoins.
However, he then went on to say:
“Sites like Coinmarketcap are reliant upon the accuracy of the data they’re fed via API from cryptocurrency exchanges. While CMC can take measures to omit or penalize platforms that have been found to be misreporting volume, the onus is on the exchanges themselves: they could fix this problem overnight if they wanted, but as it stands, there’s no economic incentive to do so.”
Similarly, Coinpaprika’s Mateusz Sroka is also of a similar opinion and believes that the issue of fake volume has been around for a number of years now. However, he believes that the past year has seen efforts to clean up the market ramp up in a big way. Not only that, in a recent interview, he added that a number of crypto exchanges were already “feeling a lot of pressure to act more ethically due to the introduction of a number of new regulatory measures within this niche’ domain”.
Some CMC Alternatives That You Can Consider Using
- Messari: One of the best websites for investors looking to procure “true” trading volume associated with various crypto assets.
- Openmarketcap: Another excellent portal that makes use of prices and trading volume data that is sourced from trusted exchanges.
- Coinpaprika: Coinpaprika provides users with accurate, clear data on trading volumes as well as other vital info related to price differences between various exchanges.
- Blockmodo: This website is concerned with providing users with up-to-date information pertaining to the hype surrounding various cryptocurrency projects on a day-to-day basis.
- Coinratecap: Another excellent CMC alternative, Coinratecap comes laden with a host of novel features such as a “real-time cryptocurrency price converter”.
- Coingecko: This is an excellent tracking portal for people looking to source new crypto assets being released for public utilization on a near daily basis.
- Coincodex: Last but not least, we have Coincodex, a market data website that comes pre-built with a number of customized filters that can help investors track the value of different digital currencies in a highly streamlined/efficient manner.