Glossary
Market Capitalisation (Crypto)
Market capitalisation is a coin's current price multiplied by its circulating supply. It is the number every ranking on this site is sorted by - and the number most new crypto buyers read completely wrong.
What it is
Market capitalisation is the total value the market currently assigns to a cryptocurrency. You calculate it by multiplying the coin's current price by the number of coins in circulation. A coin trading at $2 with 500 million coins in circulation has a market cap of $1 billion, regardless of how cheap the $2 price tag looks.
This matters because the unit price is marketing noise. A coin priced at $0.0004 is not 'cheaper' than Bitcoin; it just has more units. Market cap is the only honest way to compare two crypto assets by size: it is the crypto equivalent of a company's total share value on the ASX. When this site ranks coins, and when any serious tracker does the same, the ranking is by market cap, not price.
A coin's market cap is not money sitting in a vault somewhere. It is a snapshot of the last traded price applied to every coin at once, most of which would never sell at that price.
Key takeaways
- Market cap equals price multiplied by circulating supply - nothing else, and nothing clever about it.
- A low unit price does not mean a cheap coin; supply decides that.
- Coins are ranked by market cap, never by price per coin.
- Market cap is a snapshot, not money parked inside the asset.
- Fully diluted valuation counts all possible future coins, not just today's supply.
How it works
The formula is one line: market cap = current price x circulating supply. Circulating supply is the number of coins that have been mined or released and can trade today. It excludes locked tokens, team allocations not yet vested, and coins provably burned. Trackers pull the price from exchange order books and the supply from each network's own rules, then recompute the cap every time the price ticks.
Two distortions confuse new buyers. The first is fully diluted valuation, or FDV, which multiplies today's price by the maximum possible supply, including tokens that do not exist yet. A coin can show a $1 billion market cap and a $20 billion FDV at the same time; the gap between them is future sell pressure. The second is supply inflation: many networks mint new coins forever, so a flat price still means a growing market cap.
On Bitcoin's page the cap reflects roughly 19.9 million circulating coins. Its maximum supply is 21 million, hard-coded, so its FDV and market cap nearly match - which is precisely why Bitcoin reads differently from a coin releasing tokens to insiders each month.
Why it matters
If you buy crypto in Australia, the ATO generally treats each coin as an asset for capital gains tax. Your taxable gain depends on the price you paid and the price you sold at, so per-coin price feels like the whole story. It is not. Market cap tells you how much room the trade statistically has: doubling a $10 billion asset requires about $10 billion of new belief, while doubling a $100 billion asset requires ten times that. This is why a $0.02 memecoin can still be 'expensive' and a $100,000 Bitcoin is not automatically 'done'.
It also protects you from the oldest trick on Australian exchange apps: ranking coins by unit price to make them look like bargains. I have watched a colleague named Brent (yes, that Brent) buy 40,000 units of a sub-cent token because 'it only has to reach one dollar'. The coin's circulating supply made one dollar a market cap larger than the entire Australian banking sector. He did not know, because nobody checks supply on a Friday night.
The highest-leverage habit before any buy on this site is to compare market caps, not prices - then check the market-cap rankings and click into each coin's supply figures before deciding anything.
Real-world examples
Bitcoin at $150,000 AUD with 19.9 million coins
Take Bitcoin trading at $150,000 per coin with 19.9 million coins in circulation, as you can verify on the live Bitcoin price page. The market cap is $150,000 multiplied by 19.9 million, or roughly $2.99 trillion AUD. Now suppose Bitcoin's price doubles to $300,000. The market cap doubles too, to about $5.98 trillion - assuming no new coins. Because Bitcoin's issuance is small and scheduled, that assumption nearly holds. The price move and the market cap move tell the same story here.
A $0.05 token with 200 billion coins
Consider a token priced at five cents with 200 billion coins in circulation. The market cap is $10 billion, instantly catapulting it above most companies on the ASX. For the token to 'just reach one dollar', the market cap must reach $200 billion - roughly the size of the entire Commonwealth Bank. The unit price says 'cheap'. The market cap says 'already enormous'. Only one of them is doing honest arithmetic.
Market cap vs FDV on a new launch
A new token launches at $1 with 100 million coins released and a maximum supply of 1 billion. The market cap is $100 million, which looks modest. The FDV is $1 billion, because at the same price the full future supply would be worth ten times as much. As the remaining 900 million tokens vest and release over the next four years, holders absorb that sell pressure. If demand stays flat, the price halves more than once even though the market cap keeps climbing.
Common mistakes
Mistake: Buying a coin because the unit price looks cheap.
Why it bites you: Unit price means nothing without supply. A $0.01 coin can already carry a $10 billion market cap, and 'it only has to hit $1' can imply a trillion-dollar valuation larger than the ASX's biggest companies combined.
Mistake: Treating market cap as real money invested in the coin.
Why it bites you: Market cap marks every coin to the last traded price. If holders of a $5 billion cap coin tried to sell at once, the price would collapse long before $5 billion of cash came out.
Mistake: Ignoring the gap between market cap and fully diluted valuation.
Why it bites you: Tokens still vesting are future supply at the same price. A large FDV gap means insiders and treasury allocations will be sold into the same order book you are buying from.
Mistake: Comparing two coins by price instead of market cap.
Why it bites you: Price comparisons across different supplies are meaningless. Comparing 'Bitcoin at $150k versus this coin at 3 cents' is a supply illusion, and it is how retail buyers end up holding the smallest float in a very large pile of tokens.
Ivy's take
I spent one long evening rebuilding the implied market caps of the top 'cheap coin' list on a well-known Australian exchange, and the results were bleak enough to be funny. Half the list was already valued above CBA on a one-dollar price target. The unit price is a costume the supply wears, and the costume is designed to be bought.
The actionable advice is one line of primary school multiplication. Price times supply, before every buy, every time. Do it once for the coin you are eyeing and once for Bitcoin, and you will have done more diligence than most of the market. Brent is personally offended by this paragraph. Do not be Brent.
Related jargon, defined
- Circulating supply
- Coins that exist and can trade today, excluding locked, vested, or burned tokens.
- Fully diluted valuation (FDV)
- Today's price multiplied by the maximum possible supply, including coins not yet released.
- Max supply
- The hard cap on how many coins can ever exist, where the network's rules set one.
- Token burn
- Permanently sending coins to an unusable address, reducing the circulating supply.
- Vesting
- A schedule that releases locked tokens to teams or investors over time, adding to future supply.
- CGT
- Capital gains tax, the ATO's tax on the profit between your buy and sell price on crypto.
Frequently asked questions
Is a high market cap good or bad?+
Neither, on its own. A high cap means the asset is already large, so big percentage gains need enormous new demand. A low cap can leave more room to run, but it also means thin liquidity and bigger drawdowns.
Can a coin's market cap go up while the price goes down?+
Yes, when supply grows faster than the price falls. Networks minting new coins every block can show a climbing cap alongside a falling price.
Why do two trackers show different market caps for the same coin?+
Each tracker makes its own call on circulating supply, especially around locked and vesting tokens. Different supply assumptions produce different caps at the same price.
Does market cap matter for my Australian crypto tax?+
No - the ATO taxes your actual gain per disposal, not the asset's market cap. Market cap is a comparison tool for buyers, not a tax input.
What is a 'small cap' coin in crypto?+
There is no official line, but trackers loosely call anything under a few hundred million dollars small cap. Those coins can move violently on modest orders, because there is simply less depth to trade against.
Disclaimer: This information is general in nature and does not constitute financial or legal advice. Always consult a qualified professional for your specific situation.
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Ivy Sinclair-Wren
Financial Chaos Analyst
Ivy Sinclair-Wren is a Financial Chaos Analyst covering crypto markets, investing behaviour, and the Australian habit of checking prices during family dinners. Based in Melbourne, she reviews AUD Crypto Tracker's coin guides for accuracy, ATO alignment, and ruthless utility — no hype, no predictions, just what the data says.