High Market Cap Coin vs Low Market Cap Coin: Which One Is Best For Investment?

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Market cap coin

Market capitalization is commonly referred to as “cap”.

The terms “high market cap coins” and “low market cap coins” are frequently used to categorize market caps, which are used to estimate the actual market value of a cryptocurrency. 

Read this blog that goes over everything regarding high and low-market-cap coins to have a better understanding of both categories. 

So, let’s start with, 

What exactly is market cap?

Investors may learn about a coin’s size through its market capitalization, and it can even be used to assess one coin’s value to another. As market capitalization is a gauge of how much the general public is prepared to pay for the coin, the idea can also hint at what the market thinks about the coin’s potential in the future. 

Over the past 24 hours, the total volume traded on the cryptocurrency market has increased by 3.80% to $37.05B. DeFi’s total 24-hour volume is $2.29B, or 6.17% of the whole crypto market. All stable coin volume is currently $34.34B, or 92.69% of the 24-hour volume of the entire crypto market.

At the moment, Bitcoin holds a 38.47% market share, up 0.13% from the previous day. 

How is the market cap calculated?

The market cap of a crypto coin is calculated by multiplying the number of tokens by their price (token total x price of a token). Typically, we consider the circulating “cap” (total number of tokens currently in circulation) and the overall cap (total number of tokens that can be created). The overall market capitalization based on all coins that could possibly be minted is known as a coin’s Fully Diluted Value (FDV). 

Moving ahead, let’s discuss this,

High market cap coins: Quick Overview!

A project with a high cap will likely be a tried-and-true mainstay. Usually, it has the liquidity required for a few competitors of moderate size to participate. A market order is possible, and slippage is generally unlikely.

Because of this, high-market capitalization coins are sometimes regarded as more risk-averse investments than their low-market capitalization coin equivalents. The growth potential is significantly less aggressive in exchange.

Although a considerable market cap is undoubtedly advantageous for a particular cryptocurrency, it isn’t always the greatest for investors. Compared to larger coins, smaller market-cap coins may have much more growing space.

When Bitcoin’s overall market value reaches new all-time highs, all other cryptocurrencies tend to rise because Bitcoin is crucial to the whole cryptocurrency industry.

It is uncommon to lose everything on a big cap, but it is not impossible. 

Low market cap coins: Quick Overview!

Typically, coins with a market cap under $1 billion are known as low-market-cap cryptocurrencies. Low-capitalization cryptocurrencies are frequently unstable, youthful, high-risk, market-dependent, cheap, readily manipulable, and unproven in terms of future prospects. 

It has less liquidity and market values than its higher market capitalization counterparts; therefore, it doesn’t take as much money to shift its prices. As a result, small-cap cryptocurrency coins are far more volatile than other cryptocurrencies.

They are subject to significant price swings. Concerning these cryptos, daily fluctuations of 10–20%, or even 100% or more, are not that unusual. Additionally, the success of the larger cryptocurrency market is crucial for these market cap coins. They often depreciate as well, but at a much faster rate when the price of Bitcoin is falling. On the other hand, if Bitcoin and the market are doing well, these coins may see significant price gains. 

As you’ve seen the basic overview of high & low market cap coins; now let’s move forward and discuss,

High market cap coins vs low market cap coins! 

We essentially classify cryptocurrency projects based on popularity and risk by rating currencies based on market cap. It demonstrates the degree of risk we practically accept when investing in cryptocurrencies. Project strength, fundamental values, volatility, liquidity, and responsiveness are the underlying factors.

Which of these two categories is riskier, more variable, has less liquidity, and has greater responsiveness? 

Let’s find out!

1. High market cap coins 

Investments in high caps will result in slow, conservative growth rather than immediate, significant gains.

High-cap coins have a high level of liquidity. This indicates that these coins are widely available on cryptocurrency exchanges and have a significant trading volume. High liquidity makes it simple for investors to enter and exit the market. Large purchase or sell orders can be made, and they can be filled right away. 

2. Low market cap coins

Smaller companies are additionally more susceptible to market trends. Since these coins are mostly brand-new and have little historical context, a single favorable or unfavorable media report might easily make or destroy the currency.

Low caps have less liquid, which is another issue. Consequently, you rarely discover these coins on well-known exchanges. Large purchases or sales of low-cap coins are challenging due to a lack of exchange and trading volume. 

Market Caps: Are they manipulable?

Definitely, yes! By changing the coin’s price, one can manipulate market caps. Low-cap coins frequently experience this because of their limited circulating supply and low active trading volume, which makes it simple for someone to influence the price by a few thousand dollars. 

Conclusion

Investors will require a number of market capitalizations to properly evaluate the thousands of digital assets available on the market.

Market capitalization is not the only factor that influences profitable trading and investment in cryptocurrencies, though. Real-world utility, the people behind the project, hype, and many other aspects are worthwhile considerations. Prior to investing in any coin, investors must make a significant effort to conduct an in-depth study and analysis.