Published by Raynor de Best, Jan 11, 2021

The cumulative market capitalization of cryptocurrencies grew around 300 percent in 2020, as the digital coins became an increasingly investment tool. This was even above the market cap reached in 2017 - for many consumers, the break-out year for Bitcoin and its fellow-currencies. Bitcoin's market cap made up the majority of the overall market capitalization.

What is market cap?

Market capitalization is a financial measure typically used for publicly traded firms, computed by multiplying the share price by the number of outstanding shares. However, cryptocurrency analysts calculate it as the price of the virtual currencies times the number of coins in the market. This gives cryptocurrency investors an idea of the overall market size, and watching the evolution of the measure tells how much money is flowing in or out of each cryptocurrency.

Cryptocurrency as an investment

The price of Bitcoin has been erratic, and most other cryptocurrencies follow its larger price swings. This volatility attracts investors who hope to buy when the price is low and sell at its peak, turning a profit. However, this does little for price stability. As such, few firms accept payment in cryptocurrencies.

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