The crypto market cap is a measurement of the relative size of the crypto market. It is calculated by adding together the market caps of each individual coin within the market. The market cap of each individual coin is calculated by multiplying the current price per coin/token with the total number of them that are in circulation. For instance, bitcoin that has yet to be mined is not included in bitcoin’s market cap, although we know they will exist in the future.
Because crypto is a decentralized market, every exchange can determine the coins they will include in the crypto market cap. You will get a different total market cap from CoinGecko than you will from CoinMarketCap because CoinGecko currently keeps up with 5,847 coins while CoinMarketCap follows 6,523. The process for getting listed on these influential sites is unique to each site.
Literally anyone can create an exchange in the crypto space, but most of them do not attract enough attention to be influential. Though there is no central authority pegging a market cap or coin pricing to any standard, the market itself tends to determine limits on volatility. Experts believe that authority on the subject will eventually centralize, although they are uncertain of how that authority will exist and how many perspectives it will include.
For instance, many casual investors assume the Google listed price for Bitcoin is the true price, though Google sources that information from Coinbase. The popular finance platform for Yahoo sources its bitcoin price from CoinMarketCap. These prices are different even if you search for the real-time price at the same time.
Volatility in the Market Cap
Coins and tokens can and do trade for different prices on different exchanges. This is similar to the securities market, although crypto exchanges can have a price spread that is quite noticeable. Because the individual price of each currency affects the market cap, differences in the pricing cause volatility in the number each exchange reports.
Denominating the Market Cap
The crypto market cap can be denominated in fiat currency because bitcoin has been informally connected to a dollar value. Much of the volatility of bitcoin comes from the fact that there is no centralized standard for the link between crypto and fiat currencies. As a result, most crypto experts prefer to express the crypto market cap denominated through bitcoin.
As the largest cryptocurrency in the world, bitcoin tends to influence the volatility of the entire market. Most large crypto exchanges will include a metric known as “dominance” showcasing how much of the market cap top coins are representative of. This metric is usually associated with bitcoin and varies based upon the number of coins that are being tracked on an exchange. For instance, CoinGecko records BTC dominance of 57.6% while CoinMarketCap has the same metric at 59.2%