CoinMarketCap Explained: The Real Funda of Crypto Rankings
Have you ever scrolled through CoinMarketCap, a crypto tracking sit, and wondered why Bitcoin is always on top? Or why is a $2 coin ranked 400th when both are priced the same as the top 20 coins?
This is where the concept of CoinMarketCap comes in. CoinMarketCap is not just a platform, but a way to understand the crypto market. If you are confused about how coins are ranked, this guide will explain everything to you in simple language.
Initially, it might seem that the price of a coin is everything — but the real story is something else. CoinMarketCap uses a concept called market capitalization, which tells us all about a coin.
Understand it in this way: Consider there are two valuables with the same price, it does not mean that both will be equally popular or valuable in the market. Crypto is no different., the market cap of a coin gives a better idea of its overall value and dominance. It tells us how big or small a coin is in this crypto world.
In this blog we will break down:
- What does coin market cap actually mean
- Why are coins ranked?
- How are they ranked?
- Common mistakes and Smart ways to use CoinMarketCap
So let’s dive into the world of CoinMarketCap and understand the real funda behind these rankings.
✅ What is CoinMarketCap?
MarketCap means market capitalization, i.e. the overall value or size of a coin.
Instead of just looking at the price of a coin, MarketCap considers the total value of that coin – the combined worth of all the coins circulating in the market.
📌 Let us understand with an example:
If the price of 1 Bitcoin is $65,000 and 1.9 crore Bitcoins are circulating in the market:
$65,000 × 1.9 crore = $1.235 trillion
This is the total market value of Bitcoin.
Just like in the stock market, companies are ranked on the basis of overall value. Similarly, crypto coins are also ranked on the basis of market cap.
🏆 Why are coins ranked by market cap?
Websites like Coinmarketcap.com give more importance to market cap than price – and the reason for this is solid.
Imagine, a coin is worth just $1 and it has billions of tokens. And there is a $500 coin which has only a few thousand tokens. So in the crypto market, the value of a $1 token can be more than the $500 one. That is why market cap shows the real value of the coin.
Today Bitcoin and Ethereum are on top because their per coin price is high but their total market value is even higher.
📊 How does CoinMarketCap rank coins?
CoinMarketCap uses several other important metrics other than “market cap – which is the main factor”:
- 24-hour price change (%) – how much the price of a coin or token changed in the last 24 hours.
- Trading volume – how much a coin is being actively bought/sold
- Circulating supply – the amount of coins available in the market
- Total supply – total coins that can ever enter the market
- Market dominance – the share of that coin in the overall crypto market
- Fully diluted market cap – what will be the total value of that specific coin if all tokens are released
All of these together give you an idea of the coin’s popularity, strength, and market presence.
🚫 Common Mistakes Regarding MarketCap
Let’s get rid of some misconceptions:
❌ “High market cap = safe investment”
Not necessarily. A coin’s market cap can be big, but it is still risky. News, hacks, or regulations can cause the price to crash.
❌ “Low-price coins will easily do better than Bitcoin”
$2 coin is definitely cheaper, but if it has trillions of tokens, its market cap can never become like Bitcoin without massive growth.
🛠 Smart Ways to Use CoinMarketCap
If you are new to CoinMarketCap, these tips will help you:
🔍 1. Don’t judge by just looking at the price
A low priced coin is not always cheap or valuable. Check MarketCap to know its real market value.
📉 2. Make sure to look at the trading volume
High volume = active trading = you can easily buy/sell. Low volume = more risk.
📚 3. Always DYOR (Do Your Own Research)
CoinMarketCap is a starting point. After that:
- Read the coin’s whitepaper
- Visit the official website
- Check out its community on platforms like Twitter, Reddit, Discord
By doing all this, you can avoid scams and make better decisions.
Next time when you find a coin interesting, don’t just look at the price. Also check its market cap, volume and activity on CoinMarketCap.
The more informed you are, the better you will be able to invest.
💭Which coin did you discover first on CoinMarketCap? Do tell us in the comments!