📊 Capitalization and everything you should know about it

Market capitalization is the total value of all tokens outstanding on a market. It is calculated by multiplying the current token price with the total number of tokens in circulation.

Market capitalization determines how much a company or cryptocurrency can be worth, shows the perspectives of growth and dynamics of development and helps investors to make the right decisions for the long haul.

🧮 How to calculate:

Market cap = price of 1 token*total number of tokens in circulation.

To compare two different projects or companies you need to analyze their market caps. The coin with a higher price doesn’t promise success to your investments. Market cap shows you more vital insides that help to plan your investment portfolio.

📊 How to analyze the market cap and use it?

Projects and currencies are divided into 3 types depending on the market cap amount:

🔺 Large-cap — projects and cryptos with a market cap of more than $10B. These are Bitcoin, Ethereum, Tether, USDC, BNB, Cardano, Solana, XRP. Such projects are considered low-risk investment assets. You may not accept a passive income in the near future investing in these assets but in a long-term perspective, you definitely win. These companies generally reward investors with a consistent increase in coin value and dividend payments. On the other side, they have limited opportunities for continued growth.

🔺 Mid-cap — projects with a market cap between $2B and $10B. They are considered as riskier for investment as well as more profitable from a short-term perspective. These projects are in their further growth stage so investors can get positive ROI and may not wait for several years. Mid-cap are such projects as Dogecoin, Polkadot, DAI, Tron, Shiba, Polygon, Litecoin, Avalanche, Uniswap, Cronos.

🔺 Small-cap — a project that has a market capitalization of between $300M to $2B. These projects could be young, working in a specific niche or new industries. They are the riskiest to invest in due to their age, size and the markets they handle. Smaller projects with fewer resources are more sensitive to economic slowdowns. Small-cap projects are Vechain, Decentraland, Ape Coin, The Sandbox, Filecoin, Axie Infinity. Small-cap coin prices tend to be more volatile and less liquid than larger companies. At the same time, small companies often provide greater growth opportunities than large caps.

Market cap doesn’t affect coin or stock price it demonstrates the size of a project but there are two factors that can alter a project’s market cap. These are significant changes in the price of a coin or when a company issues or repurchases coins.

▶️ What is diluted crypto market capitalization?

Diluted crypto market capitalization is a method of measuring estimated future market cap. To calculate it you need to multiple a current crypto price with a future general supply. Diluted market cap shows future perspective of a cryptocurrency or a project but its estimated value could change due to price fluctuations and total supply modifications.

▶️ How we come to a deflationary token?

In general cryptos circulation should increase every year while a project issues more tokens and its market cap will increase too. But since a project want to increase token’s price it burns some amount of token supply changing total supply. At first view, it seems that a token price will grow and diluted market cap will grow too despite reducing total supply. But if token price didn’t change or decreased the diluted market cap would fall. So you never know how burning mechanism will affect the market cap and a project attractiveness.

To form an investment portfolio that works you need to combine projects with different market cap types.

✅ MMPro provides you with an opportunity to get revenue from participating in ICOs and IDOs of projects with different market caps.

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