cryptocurrency: market capitalization has been explained – what investors should know
The world of cryptocurrencies has gained significant attention in recent years, and many investors attract the potential of high profit and diversification. However, one of the most important concepts in understanding cryptocurrency is market capitalization (market capitalization). In this article, we will break down what market capitalization means, as it is calculated and why it is crucial for investors.
What is market capitalization?
Market capitalization refers to the total value of the company’s overdue shares. It represents the total amount of money that is invested in shares by all shareholders, including individual investors, institutional investors and other websites interested in the purchase or sale of shares. Think about it as a measure of the size and impact of the company’s market.
How is market capitalization calculated?
Market capitalization is calculated using the following formula:
Market capitalization = total Number of shares X Current price per share
For example, let’s say that a public quotation company has 100 million shares, and its current price is 10 USD each. By using this data, we can calculate market capitalization as follows:
Market capitalization = 100,000,000 shares x 10 USD per share
= $ 1,000,000,000
What are Bitcoin, Ethereum and other cryptocurrencies?
Before immersing yourself in market capitalization, it is necessary to understand what cryptocurrencies are. There are many different types of cryptocurrencies, each with their own unique features, cases of use and advantages.
* Bitcoin (BTC)
: The first and best known cryptocurrency, created by an anonymous person or group in 2009.
* Ethereum (ETH) : Decentralized platform that allows you to create intelligent contracts and decentralized applications (DAPP).
* Litecoin (LTC) : Cryptocurrency peer-to-peer similar to bitcoin, but with faster transaction processing time.
* Ripple (XRP) : Open Source, Distributed book technology used for cross -border payments.
Why is market capitalization important for investors?
Market capitalization is crucial for investors because:
- Specify the investment value
: The capitalization of the cryptocurrency market defines its potential price movements and market impact.
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- tracking performance : by monitoring market capitalization, investors can assess the overall performance of their portfolio.
Application
Cryptocurrency and market capitalization are intricately related. Understanding how the market capitalization is calculated and what it represents will give you a solid basis for investing in cryptocurrencies. As the market evolutions, the awareness of these concepts will help you make conscious decisions about your investments.