Cryptocurrency Market Cap and Volatility

Market Cap / Market Capital is an index that measures the track record of the market value of that particular cryptocurrency. As we know, there are numerous cryptocurrencies out there in the market. And to compare them, Market Cap is one of the efficient ways. Though the Market Cap is an important index to measure, it still gets criticized. And the reason is it roughly reflects the popularity of the cryptocurrency in the longer run.

The market cap of the cryptocurrency is calculated by multiplying the current price of the cryptocurrency to its circulating supply.

Market Capital = Price of the Cryptocurrency (X times) Supply

Market Cap is inversely proportional to the volatility of cryptocurrency, that is, the bigger the market cap is, the less volatile the crypto assets are.

Assets with large capital have seen lower volatility because of their well-established market. Mid Capital assets are considered to be more volatile but they have more possibility of higher growth. And the small cryptocurrencies are considered to be the most volatile and of high risk. The reason is, it is controlled by a small number of groups that sell off their assets leading to its crash which doesn't happen in assets of large market cap. They also have the potential, but it is always better to invest in Mid or Large Cap cryptocurrencies for the safety of the money.

Though we recommend you to do in depth research about the cryptocurrency in which you're going to invest. Consider all the crucial factors involved in its growth. Don't rely on the market cap index because it doesn't tell much about the actual trading supply done in the last couple of hours. And hence it is important to keep on checking the recent ups and downs of the market before investing in any of the cryptocurrencies.