The price of a cryptocurrency is calculated by taking the unconverted price directly from cryptocurrency exchanges and converting it into US dollars or another available currency (BTC, ETH, EOS). The calculated data is updated every 8 seconds. The value of cryptocurrency is determined by supply and demand, just like anything else people want. If demand increases faster than supply, the price rises.
For example, if there is a drought, the price of grain and agricultural products increases if demand does not change. The same principle of supply and demand applies to cryptocurrencies. Cryptocurrency gains value when demand rises above supply. Supply and demand are an important factor that determines the value of anything that can be traded, including all digital currencies on the market.
For example, if more people try to buy bitcoins, while others are willing to sell them, the price will rise and vice versa. And since the supply of many cryptocurrencies is limited, the increase in popularity has driven prices up. The cryptocurrency market capitalization is the total value of a cryptocurrency. When market capitalization is calculated by multiplying the share price by the outstanding shares, the market capitalization is calculated by multiplying the price of cryptocurrency by the number of coins in circulation.
As always, you should do some research to make sure that any cryptocurrency you're thinking of investing in isn't being artificially bot-driven. He is the founder and chief crypto officer of Master The Crypto, a knowledge center and resource center that focuses on investing in cryptocurrencies and everything related to Blockchain. And since experts say you should stick to Bitcoin and Ethereum, and not let cryptocurrencies account for more than 5% of your total portfolio, there is less need to use market capitalization to determine investment decisions. While market capitalization (the total value of a company's total shares) can help investors build and maintain a balanced investment portfolio, experts say those rules don't exactly apply to crypto investors.
While market capitalization has a more limited application with cryptocurrency investment, there is a way it can help guide the way you invest in Bitcoin and Ethereum.