The entire crypto market is worth almost as much as Apple! That might sound like a bold statement but is it really so? What’s the determining factor? Market capitalization of course, and that’s exactly what today’s article is about!
Disclaimer: Our content is intended to be used and must be used for informational purposes only. It is very important to do your own research and analysis before making any investment based on your personal circumstances.
What is market capitalization?
Market capitalization represents the market value of a listed company. It is obtained by multiplying the number of its shares by their market value. It should not be confused with the enterprise value, which includes the financial debt.
The market capitalization theoretically corresponds to the sum that a buyer would have to pay in order to acquire 100% of the shares of a company. In reality, the latter must often accept to pay more than the market price.
What about Bitcoin?
It is exactly the same for BTC. We know that there will be 21 million when the last one is mined, and the market capitalization will then be 21 million multiplied by the price of BTC. For the moment all BTC are not yet mined but the principle remains exactly the same, Price x number of BTC in circulation = Market capitalization of BTC.
What about the rest of the market?
It is true that BTC occupies a large part of the market with a dominance that is still close to 55% at the time of writing, but the altcoins are there too! ETH’s dominance has now reached 12% which makes it the second biggest crypto.
The most striking fact is that in recent months, the total market capitalization of the market has doubled from 940 billion in early January to 1943 billion today.
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What are the reasons?
The answer is obvious – it is the bull market, of course! But what has fueled this bull market is the long awaited participation of institutional capital. This of course concerns the investment banks, and it’s not only the purchase by Tesla. Therefore, we can safely say that the adoption is growing, as evidenced by Paypal which now accepts payments in crypto.
Is it too late to invest?
It depends on your investment horizon. If you want to invest for the long term, it may be better to wait for a downturn to enter at a better price. On the other hand, if you are rather interested in trading, there is no problem.
Make sure you trade on pairs with sufficient liquidity and follow the golden rule of successful trading – risk management.
Have we reached the peak of growth in the crypto market? Based on the wall of institutional money that’s pouring into the space this year, we can safely say there is definitely room for growth. But just how far will we go and will bitcoin ever top gold’s market capitalization? Unfortunately, that’s something that only time will tell.