Many people who are new to bitcoin seem to be confused about what bitcoin’s market cap really means… Here is a simple breakdown…

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I have been talking to a lot of people lately who are relatively new to the crypto space and do not seem to understand what bitcoin’s market cap really means and why it is such an important metric that most coin tracking websites use it as a benchmark to rank various cryptos.

Market Cap is not exactly a new term and has been used in the financial sector for quite some time, but understandably for anyone who is not in this space, this term can be confusing.

Simply put, Market Cap for bitcoin is the **total value of the** ***circulating*** **coins**.

>Market Capitalization = (Total Circulating Supply) X (Real-Time Price Value)

Do note that it is the *total circulating* supply and not the total available supply that is used in the calculations. So, for bitcoin, it would be 19.025 million and not 21 million.

Market Cap is a **dynamic value**, which means that it keeps changing as the price and supply change.

It is considered to be a reliable metric to gauge how well the coin is performing in the market compared to others. Higher market cap assets are usually more popular, relatively stable, and pose a lower risk than the rest.

But one important thing to note here is that it is not the only metric that defines the performance of bitcoin, market sentiment, geopolitical factors, technical developments, and adoption, all play a role in deciding how well it is doing.

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*Source:* [*Blockonomics – What is Crypto Market Capitalization?*](https://blog.blockonomics.co/what-is-crypto-market-capitalization-db8552b762cc)

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Edit: Market Cap is generally pegged to a fiat value to see its performance in the overall market which can include all kinds of assets, not just crypto. This is why market cap is usually measured in fiat value.

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