What is the relationship between circulating supply and market cap in the cryptocurrency market?

1 answers

• Dec 24, 2021 · 3 years ago
  In the cryptocurrency market, the relationship between circulating supply and market cap is crucial for investors and traders. The circulating supply refers to the number of coins or tokens that are currently in circulation and available for trading. On the other hand, market cap is a measure of the total value of a cryptocurrency, calculated by multiplying the circulating supply by the current price. The circulating supply directly affects the market cap because it determines the total value of the cryptocurrency. If the circulating supply increases, the market cap will also increase, assuming the price remains stable. Conversely, if the circulating supply decreases, the market cap will decrease. It's important to consider both the circulating supply and market cap when evaluating a cryptocurrency's potential for growth and investment opportunities. By understanding this relationship, investors can make more informed decisions in the cryptocurrency market.
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