Market cap: how to calculate it and what it doesn't tell you

Market capitalization (market cap) is the product of the current price of one unit and the number of units in circulation: market cap = price × circulating supply. It is used to compare the size of projects and helps tell a large, well-known asset from a small one. You will also see fully diluted market cap, calculated from the target maximum supply.

It is an approximate indicator, not the amount the market has “put into” a project. The price is set by the last trade, so you could not cash out the entire market cap by selling. With low liquidity, a large market cap on paper can be deceptive, and circulating supply data is sometimes an estimate. That is why it is worth comparing it with volume and market depth.