Library · Crypto, word by word · Tokens and supply
What is market cap?
Market cap (market capitalization) is a token's current price multiplied by the number of units in circulation. It is a quick way to compare the size of coins, borrowed from stock markets, where it is the share price times the shares outstanding.
What it means for you
Market cap is a perceived value, not money anyone could take out: selling a large amount pushes the price down, so a holding usually sells for less than price times quantity. It also depends on which supply figure is counted as circulating.
A common mistake: “A coin priced at a few cents is cheap compared with one priced in the thousands.”
In fact: Unit price means little without supply. FINRA notes the number of units outstanding is what matters for size; a low price with a huge supply can mean a larger market cap than a high price with a small one.
How it works
FINRA describes market cap as the number of shares outstanding multiplied by the current price, and calls it a perceived value, because the price is set by what buyers pay, not by an appraisal of actual worth. FINRA also stresses that the unit count, not the price, is what matters for judging size. For a token the equivalent count is its supply, and the SEC lists what shapes it: units reserved for a treasury or insiders, units under vesting or lock-ups, and the rules for minting and burning.
An example
Say token A trades at $2 with 10 million units circulating: market cap $20 million. Token B trades at $0.20 with 500 million units: market cap $100 million. The token with the lower price is five times larger by market cap.
Sources: FINRA: Market Cap Explained, SEC: Statement on Offerings and Registrations of Securities in the Crypto Asset Markets · checked 4 October 2026
Often confused with
On Cryptominium
Related words
Educational content, not financial advice. Written by hand and checked against the source named above. Something wrong? Tell us and we reply within two business days.