The digital market through the Blockchain has guaranteed the security of operations with cryptocurrencies, but the volatility factor cannot be controlled; this has made it even more difficult for many digital currencies to reach a better place in the ranking. Trading can also be done using exchange platforms. 1G Profit System is a fantastic illustration of a trustworthy website.
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What does market capitalization mean?
For many, this term could be confusing to understand. Still, in the cryptocurrency market, the total amount of coins extracted from a particular digital asset is referred to when talking about capitalization.
The concept could be simplified, considering the market capitalization as an indicator that allows demonstrating the stability over time of a particular digital asset, that is, of a cryptocurrency.
Find the value of the market capitalization; is done through a basic mathematical formula where the number of units extracted from a specific cryptocurrency is multiplied by its price at a particular time.
It is essential to highlight that the cryptographic market is highly affected by the volatility of its cryptocurrencies. Still, even so, it allows them to remain stable, and the trends modify their performance.
Although this factor may seem ironic, it has allowed many users to generate significant profits with their investments and forceful losses due to the whims of the market.
Importance of Market Capitalization
When entering the digital financial market and investing in cryptocurrencies, many users base their analysis and investments on a particular cryptocurrency’s price, for example, Bitcoin.
From this perspective, these users decide the strategies be used.
Investors with more experience tend to be guided by market capitalization when investing because they can globally visualize the value of digital currencies and thus establish comparisons between them.
The importance of market capitalization lies in the fact that when investing, it is necessary to visualize the perspective and performance of a cryptocurrency beyond its price in a given period.
To better understand this concept and its importance, let’s see the following comparative example:
- The cryptocurrency “D” has several units extracted from 800,000 units and whose value is $5, giving a market capitalization of $4,000,000.
- In turn, the Cryptocurrency “E” If you have 300,000 units of mined coins for $8, this would give you a market capitalization of $2,400,000.
It can be seen that although the price of Cryptocurrency “E” is higher than “D,” the market capitalization of “D” is much higher, thus making it an excellent prospect to invest in.
That is why market capitalization is essential when making decisions before investing.
Cryptocurrencies with the largest capitalization
The numbers and trends speak for themselves; investor preferences vary overnight, although many need to consolidate their investments hand in hand with a potential cryptocurrency.
Market capitalization is essential for users since it allows them to visualize the risk level to which they are subject when disposing of their capital to invest.
There are various types of market capitalization, low, mid, and high, which can help when making decisions.
High capitalization refers to digital currencies with low risk; consequently, they have a constant and demonstrated growth, which contributes to higher liquidity.
Medium capitalization is all those cryptocurrencies with a high investment risk but still have attractive characteristics yet to be exploited. Low capitalization is all those currencies that are more vulnerable to changes.
The top 5 cryptocurrencies with the highest capitalization as of March are structured as follows:
- Bitcoin (BTC) with a capitalization of around $527 billion.
- Ethereum (ETH) has a market capitalization of $217 billion.
- Tether USD (USDT) stands with a valued capitalization of $79 billion.
- Binance Coin (BNB) ranks fourth with a value of $49 billion.
- Finally, USD Coin (USDC) capitalization is nearly 33 billion dollars.
Before investing, it is necessary to evaluate all the aspects that involve cryptocurrencies, all to minimize the possible risks due to hasty decision-making.