Market capitalization can be an useful metric when assessing cryptos, but it’s not enough on its own to make investment decisions. You must also take into account a coin’s price, trends and your personal financial situation when making your choices.
Cryptocurrencies can be divided into three groups based on their market capital: large-cap coins, mid-cap coins and small-cap cryptocurrencies.
What is a coin?
Coins are small, round objects used primarily as a form of exchange or legal tender. Governments issue them in large quantities to promote trade and commerce worldwide.
Coins, made of a base metal, typically have value solely due to their status as fiat money (value declared by law and not agreed upon by the people). This makes them less of a coin than a token in the strictest sense – just as notes lack material backing but instead rely on government fiat for backing.
Coins have two flat faces, known as the “obverse” and “reverse.” Obverse refers to the front of a coin or its side featuring imagery, numerals or text; whereas reverse indicates the backside which displays the year of minting.
What is a token?
Crypto tokens are digital assets running on top of blockchains. These digital assets may represent an investor’s stake in a company, serve an economic purpose, or embody tradable goods.
Tokens can be divided into fungible and nonfungible categories. Fungible tokens, like Bitcoin (BNB), are interchangeable with other BNBs and can be exchanged for other units of the same value.
Nonfungible tokens cannot be replaced. A one-of-a-kind trade card cannot be changed into another trade card.
Tokens can be utilized for a number of purposes, such as verifying transactions or accessing content. They could also be rewarded to players in games for their contributions. Typically, these tokens are issued during an initial coin offering (ICO).
What is a large-cap coin?
A large-cap coin is one with a market capitalization of more than $10 billion. These coins tend to be secure investments due to their strong risk-reward ratio.
Additionally, these digital assets have seen incredible growth over the years – making them popular among investors.
However, these coins are highly volatile and subject to market sentiment. This could cause dramatic price changes if one investor buys or sells large amounts of coins quickly.
Cryptocurrencies are still relatively young, but they still hold the potential to make tremendous gains over time. If you’re willing to take the risk, your investment could double or triple in value!
What is a small-cap coin?
Small-cap coins refer to cryptocurrency with a market cap under $1 billion. While these coins may be overlooked by the average investor, they can still be profitable investments if identified and bought at the right time.
These cryptos typically lack exchange support, have low volume, and tend to fluctuate in price. Nonetheless, they provide investors with an opportunity to diversify their portfolio and boost profits.
Tamadoge is one of the top low cap cryptos for those in the P2E gaming multiverse niche. It offers NFT pets based on the Doge meme that players can breed, train and battle for cryptocurrency rewards.
What is a medium-cap coin?
Medium-cap coins are digital assets with a market cap between $1 billion and $10 billion. Due to their untapped growth potential, these coins may be considered high risk yet rewarding investments. Examples of such coins include Chain Link, Cardano, Litecoin, Tezos and Monero.
Although large-cap coins, like Bitcoin, are generally seen as secure investments, they’re highly volatile and can lose value quickly. Smaller coins tend to have dramatic price swings due to not being traded on many exchanges and being vulnerable to slippage, leading investors to lose large sums of money quickly. On the other hand, small caps offer potential rewards for those who act quickly when prices drop.
