Market Capitalization
The circulating supply of an asset multiplied by its current price, used as a rough measure of relative size.
The arithmetic is copied from equity markets, but the inputs are not comparable. There is no company behind most digital assets, no audited share count, and no balance sheet to anchor the figure; the supply term is a data provider's estimate and the price term is the last trade on whichever venues that provider includes. Both properties make the number easy to inflate: applying the price of a few thinly traded units to an entire supply produces a large figure without meaningful trading behind it. It is nevertheless useful as a size ranking, as an index weight, and as a denominator for ratios such as turnover, provided the reader knows what it is not.
In practice
An asset with a small tradable float can display a large market capitalization because the price set by a small number of trades is applied to every circulating unit.
The common misunderstanding
Market capitalization is neither the money that has gone into an asset nor the money that could come out of it; it is a price multiplied by an estimated supply.
The figure this maps to
Price multiplied by the number of units the data provider believes are currently in circulation.
Limits: Two providers can publish market caps for the same token that differ by tens of percent, purely because one counts foundation treasury, bridge-escrowed, or unvested team allocations as circulating and the other does not. The figure also assumes every unit could transact at the last price, which is…