Most beginners make this mistake — they see a coin priced at $0.001 and think “this is cheap, it could reach $1 and I’d be a millionaire!”
This thinking ignores market cap — the single most important number in crypto.
Market Cap = Current Price × Circulating Supply
Example:
Bitcoin price = $80,000
Bitcoin circulating supply = 19.5 million
Bitcoin market cap = $80,000 × 19,500,000 = $1.56 trillion
Market cap tells you the total value of a cryptocurrency — not just its price.
Imagine two coins:
Coin A — price $0.001, supply 1 trillion coins
Market cap = $1 billion
Coin B — price $10,000, supply 100,000 coins
Market cap = $1 billion
Both coins have the same total value! The price difference means nothing.
A $0.001 coin reaching $1 would require 1000x growth — meaning its market cap would need to reach $1 trillion. That is larger than most countries GDP.
Large Cap — over $10 billion
Bitcoin, Ethereum
Most stable, most liquid, lowest risk in crypto terms.
Mid Cap — $1 billion to $10 billion
Solana, Cardano, Chainlink
Higher potential gains but more volatile.
Small Cap — under $1 billion
Thousands of altcoins
Highest risk, highest potential reward, most likely to fail.
Circulating supply
Coins currently available in the market. Used to calculate market cap.
Total supply
All coins created so far including locked ones.
Max supply
Maximum coins that will ever exist.
Bitcoin max supply = 21 million — fixed forever.
Some coins have no max supply — infinite inflation risk.
Fully Diluted Market Cap = Price × Max Supply
This shows what market cap would be if ALL coins were in circulation.
Always check fully diluted market cap for new projects. Sometimes circulating supply is tiny but max supply is enormous — meaning massive inflation ahead.
Bitcoin Dominance = Bitcoin market cap ÷ Total crypto market cap
When Bitcoin dominance rises — altcoins usually fall.
When Bitcoin dominance falls — altcoins usually rise.
Watching dominance helps predict altcoin market conditions.
In the next topic we will learn about crypto wallets and how to store your coins safely.