What is the Market Cap and what does it tell us?
In the crypto space, just like in the stock market, Market Cap (short for total Market Capitalization) refers to the total implied value of the currency or stock. It’s found by simply multiplying the supply times the current price.
In any specific crypto project, if there is sufficient trading volume and liquidity for the markets to find fair prices, a rising Market Cap is a result of individuals and institutions buying that digital asset, which causes the price to rise. Rising price and Market Cap imply that investors optimistic about the future of that coin.
For perspective, the total Market Cap of all the cryptocurrencies and tokens is currently around $400 billion ($0.4 trillion). This number seems impressive, but in reality, isn’t that large. The crypto market is still in its early days compared to the traditional stock markets, which encompassed $82,000 billion (or $82 trillion, end of 2017, per WFE)… plus there are $67 trillion invested in the bond markets. There is about $90 trillion in the global money supply. Global Real Estate is valued at about $217 trillion.
The total value of all cryptocurrencies and ICO tokens is less than 0.27% the value of the stock & bond markets, and an even smaller amount in comparison to other major global asset classes; this comparison may give an idea of how much space there is for growth in the crypto markets in the coming years!
Sources: The Money Project, the World Federation of Exchanges