Key Points
- What is market cap in crypto? It is the total value of a token’s circulating supply at the current price, used to compare and size altcoins properly.
- Market cap is calculated as circulating supply multiplied by price… which is why supply matters just as much as price in altcoin research.
- Market cap stops “cheap coin” thinking… a low unit price can still represent a huge valuation if supply is massive.
- Circulating supply, total supply, and max supply change the interpretation… and unlocks can change the picture later.
- Market cap and fully diluted valuation (FDV) should be checked together… big gaps often signal dilution risk.
- In fundamental analysis, market cap is an early filter… it helps sanity-check upside claims, compare similar projects, and spot unrealistic narratives.
- If any terms feel unfamiliar, keep the Crypto Glossary open while you read.
Quick Answer
Market cap in crypto is the total market value of a cryptocurrency’s circulating supply. You calculate it by multiplying circulating supply by the current price. Investors use market cap to compare cryptocurrencies, estimate relative risk, and sanity-check whether price targets make sense in value terms.
Where This Lesson Fits
Lesson 1 introduced the fundamental analysis framework. Lesson 2 adds one of the first sizing metrics you will use in altcoin research… market capitalisation.
This lesson is part of the Fundamental Analysis for Beginners series. For the full lesson map and all supporting guides, visit the Fundamental Analysis hub.
If you missed Lesson 1, start here first.
What Is Market Cap In Crypto?
Market capitalisation, usually shortened to market cap, is a way to estimate the size of a crypto asset in value terms.
It answers a simple question: if every token currently in circulation was priced at the latest market price, what would the project be worth?
This matters most for altcoins, because altcoin supply designs vary wildly… and that makes coin price on its own a terrible comparison tool.
How To Calculate Market Cap
To calculate market cap, you need two inputs:
- Circulating supply, how many tokens are currently available to the market
- Current price, the latest traded price
Market cap is circulating supply multiplied by the current price.
That is the whole calculation… and it is why supply is never a footnote in altcoin due diligence.
Market Cap Versus Price
A common beginner mistake is assuming a lower priced coin has “more upside”.
Price tells you the cost of one unit. Market cap tells you the size of the entire project.
Two tokens can both be priced at 1 dollar and be completely different in size because their circulating supplies are different.
If you want market cap explained in one practical line, use this:
A price target is only meaningful if you also understand the market cap that price implies.
Worked Example: The Cheap Coin Trap ($XRP vs STORY)
As of 8 January 2026, two tokens can trade around the same unit price and still be worlds apart in valuation because circulating supply is wildly different.
Token A: XRP
Price: $2.09
Circulating supply: 60,676,393,849 XRP
Market cap: $127,020,406,070
Token B: Story (IP)
Price: $2.03
Circulating supply: 341,099,910 IP
Market cap: $691,678,967
Same “about two dollars” price per coin… completely different valuation.
This is why market cap is one of the first numbers to check when someone pitches an altcoin as “early” or “small”… price alone does not tell you size.
Circulating Supply, Total Supply, And Max Supply
Market cap uses circulating supply, not total supply.
These definitions change how you interpret risk:
- Circulating supply is what the market can actually trade today
- Total supply is how many tokens exist right now, including tokens that are locked or not freely circulating
- Max supply is the hard cap, if there is one
Some projects increase supply through emissions. Some release locked tokens over time. Some have no fixed maximum supply.
So when someone shares a market cap, the next question is always… what happens to supply from here?
Market Cap Versus Fully Diluted Valuation
Market cap is based on circulating supply.
Fully diluted valuation, often shortened to FDV, estimates value using the total supply or max supply number a project reports.
Why this matters: an altcoin can look small on market cap if very little supply is circulating… but the valuation can be far larger once unlocks and emissions play out.
Worked Example: Market Cap And FDV Dilution Risk (Worldcoin, WLD)
As of 8 January 2026, Worldcoin (WLD) shows how a large gap between market cap and fully diluted valuation can signal potential dilution risk.
WLD’s market cap is about $1.57B, with a circulating supply of 2.71B tokens.
Its max supply is listed as 10B, and its fully diluted valuation is shown around $5.88B to $5.97B depending on the tracker.
That gap does not automatically mean “bad”… but it does mean a large amount of supply is not yet circulating. In fundamental analysis, this is the prompt to check unlock schedules, emissions, insider allocations, and whether demand can realistically absorb future supply as it comes online.
How To Use Market Cap In Fundamental Analysis
Use market cap as an early filter, not a final verdict.
A simple workflow:
Step 1: Compare like with like
Compare market caps within similar categories, similar use cases, or similar ecosystems.
Step 2: Sanity-check upside claims
If a token went to a certain price, what market cap would that imply… and does that feel realistic relative to peers?
Step 3: Map the supply path
Does circulating supply stay stable, grow slowly, or expand aggressively through unlocks and emissions?
Step 4: Pair it with evidence
Market cap tells you size… it does not tell you adoption. Pair it with product traction, team credibility, and tokenomics, which is where this series goes next.
Common Traps To Watch Out For
- Treating a higher market cap as proof a project is “safe”
- Ignoring unlocks or emissions that expand circulating supply
- Assuming a low market cap automatically means undervalued
- Comparing market caps across totally different categories without context
- Believing price targets that ignore implied market cap and dilution
Market cap is useful because it forces discipline… it stops the brain drifting into story mode.
Mini FAQs
What is market cap in crypto?
It is the total market value of a token’s circulating supply, calculated using circulating supply and the current price.
How do you calculate market cap for a cryptocurrency?
Multiply the circulating supply by the current price.
What is the difference between market cap and price in crypto?
Price is the cost of one token. Market cap reflects the total value of all circulating tokens, which is better for comparing projects.
Why does circulating supply matter for market cap?
Market cap uses circulating supply, so changes in supply through unlocks or emissions can change market cap even if price does not.
Is market cap the same as fully diluted valuation?
No. Market cap uses circulating supply. FDV uses a larger supply number and can highlight potential dilution risk.
Next Lesson
In this lesson you learned:
- What market cap in crypto is, and why it is the first sizing metric for comparing altcoins.
- How to sanity-check upside claims by thinking in valuation terms, not unit price.
In Lesson 3 you will learn:
- What tokenomics is in crypto, and how supply design changes outcomes for holders.
- How emissions, vesting and unlock schedules can create dilution risk even when narratives look strong.
This lesson is part of the Fundamental Analysis for Beginners series. For the full lesson map and all supporting guides, visit the Fundamental Analysis hub.
If this lesson helped you stop judging altcoins by coin price and start thinking in valuation terms, the next step is learning how tokenomics and unlocks shape what market cap becomes over time.
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Cut the narratives… keep the evidence.
Legal And Risk Notice
This content is for education and information only and should not be considered financial advice. Crypto assets are volatile and high risk. You are responsible for your own research and decisions, and you should consider seeking independent financial advice where appropriate.
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