The Misunderstood Market Cap: What It Really Means

The cryptocurrency market cap is often misunderstood as a measure of the amount of money invested in an asset. However, it's simply a calculation that multiplies the current unit price by the circulating supply.

This can lead to some common mistakes when comparing different assets. For example, a low unit price doesn't necessarily mean an asset is cheap, as three assets with the same market cap can have very different prices due to varying supplies.

The formula for market cap is straightforward: current price times circulating supply. But what does this calculation actually imply? It's not a measure of cash invested or liquidity, nor does it reflect fair value or the amount that holders could sell without moving the price.