Large Cap

November 21, 2023 - Around 3 mins mins to read

What is Large Cap?

Cryptocurrencies with a market capitalization of $10 billion or more are known as large cap tokens. The market capitalization of a project’s token can be calculated by multiplying the currency price by its circulating supply.

How to Calculate the Market Cap of a Token?

Let’s consider an example of a token called AAA, which has a supply of 20,000 tokens and a price of $0.20 per token. What would be its market capitalization?

Market capitalization = 20,000 tokens x $0.20 each = $4,000

The market capitalization of AAA is $4,000.

If the market capitalization of AAA is $10 billion or more, it would be classified as a large cap token.

Large cap projects typically have a long-standing history in the market, making them a safer investment option for investors.

Large Cap vs Small Cap

Crypto tokens can be divided into three categories based on their market capitalization: large cap, mid cap, and small cap. This categorization helps investors understand the nature of their investments.

In the crypto space, large cap tokens belong to well-established and popular projects, usually ranking among the top 25. These projects have a strong community and a long-standing history, making them capable of handling adverse events.

Mid cap projects have a market capitalization value between $3 billion and $10 billion. They tend to have a higher growth percentage compared to large cap projects but are also more volatile.

Small cap projects have a market cap ranging between $300 million and $2 billion. They have more growth potential but are highly sensitive to macroeconomic shifts.

Why Do Large Cap Crypto Tokens Attract Investors?

The market capitalization of a project provides valuable context for investors. It helps them assess the financial standing and the trust of the crypto community in a specific project.

Compared to small or mid cap tokens, large cap tokens are often preferred due to the project’s extensive business model. This promotes consistent performance and reduces sensitivity to small news and events, making large cap tokens less volatile and more attractive to investors.

Investing in large cap tokens also offers staking rewards. As prices increase, investors benefit from the interest income provided by these projects.

Large cap projects are known for their transparency and authenticity in operations. Investors have access to project-related information, enabling them to make informed decisions. Publicly traded large cap companies are required to provide periodic financial statements to their investors.

On the other hand, small cap firms primarily focus on business objectives. Although they have the potential for rapid growth, it is often variable. This makes small cap stocks more volatile and sensitive to market headwinds.

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