What is the market cap value in cryptos
The market cap describes the potential value of a token. The value of market cap is the result of the circulating supply multiplied by the latest trading price.
Market Cap = Circulating Supply * Last Trading Price
The Market Cap is usually calculated in dollars. That means that the last trading price should be converted to dollars. The paired value is usually a token that is not locked with the dollar value. For instance, in the Binance Smart Chain, the trading tokens are usually paired with the BNB. So, the amount of the last trade price of the paired tokens should be converted to dollars.
Last Trading Price = (Paired Tokens Transformed / Tokens Transformed) * Price of Paired Token in Dollars
Market Cap Calculation Example
Let's calculate the market cap value of Cake. We assume that the state in the latest transaction is:
- Cake total supply 379,701,715
- Cake burned tokens 180,317,835
- 10 Cake received
- 1 BNB given
- 1 BNB = 300 USD
The Circulating supply of Cake is
379,701,715 - 180,317,835 = 199,383,880 Circulating Supply
The Last trading price is
(1 / 10) * 300 = 30 USD
So the market cap is
30 * 199,383,880 = 5,981,516,400 market Cap
That means that even if the latest trading value does not change, the market cap may be increased or decreased. So, when we see the market cap of a token, we should keep in mind that the value may be affected from the paired token. Following our Binance Smart Chain example, if the BNB value decreased, then the market cap of the token will be decreased even if there are not transactions.