There are many doubts about Bitcoin market capitalization; the most important thing when talking about this topic is to understand the cryptocurrency market capitalization; this term is generally used to refer to the value of a specific cryptocurrency compared to other cryptocurrencies.
Within the blockchain technology, the metric used to measure the size or relative value of a cryptocurrency is obtained by multiplying its price in the current market by the total number of coins or tokens in circulation, obtaining a value «relative» of the market of said cryptocurrency.
How is the market value calculated?
Market value is calculated using the following formula:
Market Cap = Current Cryptocurrency Price x Amount of Coins in Circulation.
In the case of Bitcoin, which is the highest value cryptocurrency currently on the market, its capitalization value amounts to more than 900 billion dollars (since its current price is approximately 50,000 dollars). It is important to clarify that the value of the market capitalization may vary according to the number of circulating coins, but this does not mean that the value of a said currency will increase since they are different values. For example, if a group of people owns a significant number of Bitcoins and decide to put them into circulation, by introducing more coins into circulation, they will be increasing their market capitalization.
Importance of knowing the market capitalization of Bitcoin
The market capitalization value of Bitcoin can give us an “estimated” idea of the acceptance that the cryptocurrency has in the market, which serves as a reference to be able to compare it with other cryptocurrencies; it is important to note that this does not mean that said value is the most relevant, nor should we compare it with other companies that are listed on the stock exchange (which have an official market capitalization value), however, this indicator can give us a reference on the situation of a cryptocurrency in a specific period of time.
Comparison with gold
Market capitalization can also help us to compare Bitcoin with other industries; for example, in a previous article titled Bitcoin reached a trillion dollars of market capitalization, we could see how this cryptocurrency reached almost 10% of the market capitalization value of gold, which is a relevant number, especially if you take into account the age and prestige that this precious metal has.
The future of Bitcoin
Recently, Bitcoin market capitalization hit an all-time high, which occurred “before” its price went up. This indicates that the trend is that as long as the cryptocurrency continues to be stable, reliable, accepted by users and is in circulation, its capitalization in the cryptocurrency market will continue to increase; however, Bitcoin has a limit of cryptocurrencies (which can be mined or created), and this figure rises to 21 million, which could cause its market capitalization to decrease or have a more stable value at some point.
What do you think about this topic? Do you know the current value of the market capitalization of Bitcoin?
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