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Crypto For Rookies: Market Cap, Volume, And Circulating Supply

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We frequently visit price-tracking websites to check for crypto assets in the fast-increasing cryptocurrency industry. One of the most referenced sites for that is coinmarketcap.

However, most beginners find it hard to look at the table of these sites due to the unfamiliar terms. Let us decode those words in this article.

One of the commonly used terms in crypto stat websites is market cap. What is the market cap? Market capitalisation, often known as market cap, is the total market value of a company’s issued shares in the traditional market.

If we are talking about the cryptocurrency market, the definition changes, according to Cointelegraph. The crypto market cap has its own set of characteristics when compared to a regular one.

The market capitalization of a cryptocurrency is the total value of all virtual money issued. To calculate the market cap of a virtual coin, multiply its price by the total number of coins in circulation.

Market capitalization acts as an indicator for technical analysts. It aids traders in determining which cryptocurrency is the best to invest in by demonstrating a coin’s reliability.

When the market cap of a cryptocurrency rises, it gives an idea to the public that it is growing more popular and developing. Using crypto trading platforms such as Kraken or registering to Bitcoin Profit to connect with trustworthy brokers, gives us a good idea of what new investors are putting their trust into.

Another term that we need to discuss is volume. What is volume? The word “trading volumes” is commonly used in crypto market technical analysis. This word isn’t particularly esoteric. It simply refers to the total amount of transactions made over a given period.

The metric that indicates how much cryptocurrency gets traded. They are represented by the colour green and red bars and found on the chart’s floor. The positive volume is indicated by green bars, while the negative volume is by red bars. If it’s green, the price ended up higher than it started.

The red bar, on the other hand, indicates that it closed lower than it opened. The colour coding helps to identify if the volumes are bullish or bearish. It is important to understand trading volumes as they play a role in conducting technical analysis.

Hayes of Investopedia defines technical analysis as the “trading discipline employed to evaluate investments and identify trading opportunities by analysing statistical trends gathered from trading activity, such as price movement and volume.”

What does trade volume indicate? It gives traders a clue as to what the market is doing. Vast volume, for instance, tells a trader that more buyers are coming to the market, which is a good thing.

Why? It indicates that more people trust cryptocurrency and are willing to use it in transactions as they see its value. High trading volume gives an impression to the public that a cryptocurrency is significant and reliable, attracting more people to use it.

Lastly is the circulating supply. The number of cryptocurrency coins or tokens publicly available and circulating in the market is called the circulating supply. It is the number of coins that have been mined already. It does not mean that they are completely available.

Some coins have been lost in the transactions, sent to wrong addresses, or users forgot their private keys. Still, the circulating supply you see in public coin stat tracers includes missing coins.

Do not be confused with circulating supply and total supply. The total supply refers to the total number of coins produced, including those held in escrow or incorporated in a smart contract. These are bound to be released eventually in a specific event.

Closing Thoughts

Charts, tables, and the like are hard to understand when starting with crypto trading. Newbies get overwhelmed by the data and terms they see in front of them.

Confusion occurs because we do not know how to look at it, and we are unfamiliar with the terms and numbers.

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PR DESK
PR DESK
PR Desk is a guest author on TheCryptoBasic and only delivers sponsored content. Hence, views and opinions published under PR Desk are exclusively theirs and should not be taken as investment advice. If you want to publish your PR, please contact hashim@thecryptobasic.com or support@thecryptobasic.com

Disclaimer: The content is for informational purposes only, may include the author's personal opinion, and does not necessarily reflect the opinion of TheCryptoBasic. All Financial investments, including crypto, carry significant risk, so always do your complete research before investing. Never invest money you cannot afford to lose; the author or the publication does not hold any responsibility for your financial loss or gains.

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