Crypto market cap and bitcoin dominance: how they are calculated and what they miss

A cryptocurrency's market capitalisation is its price multiplied by its circulating supply: a coin trading at 2 dollars with 500 million coins in circulation has a market cap of 1 billion dollars. The total crypto market cap is the sum of that figure across all the coins a data provider tracks, and bitcoin dominance is bitcoin's market cap as a percentage of that total. These numbers are useful for comparing size, but they are calculated from the last traded price, so they say nothing about how much money was actually invested or could be withdrawn.

This guide shows how each metric is calculated, where the definitions differ between data sites, and the mistakes people make when they read rankings and dominance charts. For the background on coins and tokens, see what is cryptocurrency.

Risk first. Crypto-assets are highly volatile and can lose most or all of their value. A large market cap does not mean an asset is safe. Leveraged products such as CFDs magnify losses, and most retail CFD accounts lose money.

Market capitalisation: the basic sum

The formula is the same one used for listed companies:

• Market cap = price × circulating supply

The difference lies in the inputs. For a listed company, the number of shares outstanding is reported in audited filings. For a crypto-asset, "circulating supply" is an estimate made by the project or by the data provider, and the definition is not standardised.

Worked example: a single token

Illustrative numbers only. A token trades at 2.00 dollars.

• Circulating supply: 500,000,000 tokens.
• Market cap: 2.00 × 500,000,000 = 1,000,000,000 dollars, or 1 billion.

If the price rises 10% to 2.20 dollars, the market cap becomes 1.1 billion dollars. Nobody has to put 100 million dollars into the token for that to happen. A handful of trades at higher prices is enough to revalue every token in circulation, including those that have not moved for years.

Three supply figures you will see

Data sites usually list three supply numbers. Understanding the gap between them tells you more than the market cap itself.

• Circulating supply is the number of coins considered to be freely tradable now. It typically excludes tokens locked in vesting contracts, held in a project treasury that has not been released, or otherwise restricted.
• Total supply is the number of coins that exist now, minus any that have been verifiably destroyed (burned). It includes locked tokens.
• Maximum supply is the hard cap set in the protocol, if there is one. Bitcoin's maximum is 21 million. Many tokens have a fixed maximum; others, ether among them, have none.

What counts as circulating is often a judgement. Should a foundation's treasury count if it can sell at any time? Should tokens staked in a contract that can be withdrawn after a few days count? Different providers answer differently, which is one reason the same coin can show different market caps on different sites.

Bitcoin has its own quirk: circulating supply includes coins that are widely presumed lost, such as those in wallets whose keys were discarded in the early years. They count towards the market cap even though they may never trade again.

Fully diluted valuation (FDV)

FDV = price × maximum supply (or total supply where there is no maximum, depending on the provider).

FDV answers a hypothetical question: what would the market cap be if all the tokens that will ever exist were circulating today at today's price? The gap between market cap and FDV is a rough measure of how much supply is still to come.

Worked example: market cap versus FDV

Continuing the illustrative token above:

• Price: 2.00 dollars. Circulating supply: 500 million. Maximum supply: 2 billion.
• Market cap: 2.00 × 500,000,000 = 1 billion dollars.
• FDV: 2.00 × 2,000,000,000 = 4 billion dollars.
• Circulating share: 500 million ÷ 2 billion = 25% of eventual supply.

Three quarters of the eventual supply has not reached the market yet. If those tokens are released over the next few years to early investors and the team, the market has to absorb them. Holding the market cap at 1 billion dollars with 2 billion tokens circulating would need a price of 0.50 dollars, a 75% fall from 2.00. That is arithmetic, not a forecast: demand could grow, or the release schedule could change. But it shows why two tokens with the same market cap can carry very different supply risks. Our guide to tokenomics and token supply shows how to read release schedules.

FDV has its own blind spots. For a coin with no maximum supply, the figure depends on which supply number the provider uses. And it assumes the price would stay put as supply grows, which it rarely does.

Total crypto market cap

The total crypto market cap is the sum of individual market caps across every coin a provider tracks. Two things are worth knowing about it.

It is dominated by a few assets. Bitcoin has typically accounted for a large share of the total, and adding ether and the largest stablecoins usually covers most of the rest. The tail of thousands of small tokens adds relatively little. So the total is, in practice, mostly a measure of bitcoin and ether prices.

Coverage differs by provider. CoinMarketCap, CoinGecko and other aggregators track different lists of coins and apply different rules for including new tokens. Index symbols on charting platforms such as TradingView are built from these feeds, and some versions exclude stablecoins or exclude bitcoin (often labelled as "total market cap excluding BTC"). When you compare figures quoted in news articles, check which index is being used.

Bitcoin dominance

Bitcoin dominance = bitcoin's market cap ÷ total crypto market cap × 100

It is quoted as a percentage and often charted as its own line. People use it as a rough gauge of whether money is concentrated in bitcoin or spread across other coins. A similar calculation produces "ether dominance" or "stablecoin dominance".

Worked example: dominance rising while bitcoin falls

Illustrative numbers only. Start with:

• Bitcoin market cap: 1,200 billion dollars.
• Everything else: 1,200 billion dollars.
• Total: 2,400 billion. Dominance: 1,200 ÷ 2,400 = 50.0%.

Now suppose bitcoin falls 10% and everything else falls 20%:

• Bitcoin: 1,200 × 0.90 = 1,080 billion.
• Everything else: 1,200 × 0.80 = 960 billion.
• Total: 2,040 billion. Dominance: 1,080 ÷ 2,040 = 52.9%.

Dominance rose by almost three percentage points, while bitcoin itself lost 10% of its value. A rising dominance line is therefore not a sign that bitcoin is going up; it only means bitcoin did better, or less badly, than the rest.

Stablecoins distort dominance

Stablecoins are designed to hold a fixed value. When crypto prices fall, stablecoins hold steady, so they make up a larger share of the total, and bitcoin's share of that total is pushed down relative to where it would otherwise be. Some traders prefer a version of dominance that strips stablecoins out of the denominator.

A worked check, illustrative numbers again. Say bitcoin is 1,000 billion, other volatile coins 700 billion and stablecoins 300 billion: total 2,000 billion and dominance 50%. Excluding stablecoins, the denominator is 1,700 billion and dominance is about 58.8%. The same market, two very different headline numbers.

What dominance can and cannot tell you

Dominance tells you about relative performance and how a provider's total is composed. It does not tell you:

• whether bitcoin is rising or falling in price;
• whether money is "flowing" from altcoins into bitcoin, because market caps move with prices, not with net inflows;
• anything reliable about what happens next. Talk of "altcoin seasons" triggered by dominance falling below a particular level is a narrative, not a rule, and patterns from earlier cycles have repeated unevenly at best. See our guide to crypto market cycles for why past cycles prove little.

New coins also change dominance mechanically. When a new token launches with a large FDV and a moderate circulating supply, it is added to the total, nudging every other coin's share down even if nothing else changed.

Why market cap is not money invested

This is the single most common misreading, so it is worth spelling out.

Market cap uses the last traded price for every coin in circulation. But the last price was set by a small number of trades. If many holders tried to sell at once, they would have to accept progressively lower prices as they worked through the bids in the order book, and the price would fall long before anything like the headline figure was realised.

Worked example: thin liquidity, big valuation

Illustrative numbers only. A small token has 100 million tokens circulating and last traded at 1.00 dollar, giving a market cap of 100 million dollars. The order book shows:

• buyers for 50,000 tokens at 0.99;
• buyers for 100,000 tokens at 0.95;
• buyers for 200,000 tokens at 0.85.

Selling 350,000 tokens, just 0.35% of the circulating supply, would fill at an average of (50,000 × 0.99 + 100,000 × 0.95 + 200,000 × 0.85) ÷ 350,000, which is about 0.90 dollars, and the last trade at 0.85 would revalue the whole supply at 85 million dollars. The market cap fell by 15 million dollars on roughly 315,000 dollars of selling.

The reverse also holds. Someone can push a thinly traded token's price up with a modest amount of buying, and the market cap rises by many times that amount. This is one mechanism behind pump and dump schemes. Our guide to crypto order books and liquidity explains depth and slippage in more detail.

Better questions to ask than "what is its rank?"

Market cap rankings are a starting point. To get a fuller picture, look at:

• Trading volume and order book depth on reputable venues. Reported volume can be inflated on some exchanges, so depth near the price is often more informative.
• Circulating share of maximum supply and the release schedule for the rest.
• Ownership concentration. Blockchain explorers show the largest wallets; a token where a few addresses hold most of the supply is fragile. Some of those addresses belong to exchanges holding coins for many customers, so interpret them with care.
• Where it trades. A token listed on only one or two small exchanges is very different from one with deep markets on many.
• Whether a stablecoin's market cap reflects reserves. For stablecoins, market cap is simply the number of tokens issued; whether they are backed is a separate question covered in stablecoins explained.

Using these numbers sensibly

None of these metrics is useless. Used together, and with their limits in mind, they answer some practical questions:

• How big is this asset relative to others? Market cap rank gives a rough answer, provided you check that the circulating supply figure is reasonable.
• How much supply is still to come? The ratio of market cap to FDV, or of circulating to maximum supply, tells you.
• Is the market led by bitcoin or by everything else? Dominance, preferably the version excluding stablecoins, shows relative performance over a period.
• Can I trade a meaningful size without moving the price? Market cap cannot answer this; only depth and volume on the venues you would use can.

Write down which data source and which version of each metric you use, and stick to it, so that changes you see reflect the market rather than a switch in methodology.

How this relates to trading crypto CFDs

If you trade crypto through CFDs with an EU-regulated broker, market cap rankings are of limited use. Brokers typically list a small set of the largest coins, and every crypto CFD is capped at 2:1 retail leverage under ESMA rules whatever its size. What matters for your trade is the spread, overnight financing and how far price can move against you, especially around weekends, when liquidity on the underlying exchanges is thinner.

A higher market cap is loosely associated with deeper markets and narrower spreads, but it is not a measure of volatility. Large coins have fallen by more than half in past downturns. Size each position from the distance to your stop with the crypto position size calculator, and check the margin with the crypto margin calculator. Our guide to crypto volatility and risk covers sizing in markets this volatile.

Common mistakes

• Reading market cap as money invested. It is a valuation at the last price, and much of it could never be realised in a sale.
• Comparing coins by unit price. A token at 0.01 dollars is not "cheaper" than one at 100 dollars; what matters is price relative to supply. A low unit price with a huge supply can still mean a large valuation.
• Ignoring FDV. A low circulating share means a lot of supply still to arrive.
• Treating rising dominance as bullish for bitcoin. It can rise in a falling market.
• Mixing sources. Dominance on one site may include stablecoins and on another may not. Compare like with like.
• Trusting volume figures blindly. Some exchanges have reported volumes that do not reflect genuine trading.
• Assuming a top-ten coin is low risk. Rankings change, and several coins that were once in the top ten collapsed or lost most of their value.

Frequently asked questions

How is crypto market cap calculated?

Multiply a coin's price by its circulating supply. For the total crypto market cap, data providers add up that figure for every coin they track. Because providers track different coins and count supply differently, totals vary between sites.

What is the difference between market cap and fully diluted valuation?

Market cap uses the circulating supply. Fully diluted valuation uses the maximum supply (or total supply, depending on the provider), showing the valuation if every planned token existed today at the current price. A large gap means significant supply is still to be released.

What does bitcoin dominance mean?

It is bitcoin's market cap as a percentage of the total crypto market cap. It measures bitcoin's relative size, so it can rise when bitcoin falls, provided other coins fall more.

Why is bitcoin dominance different on different websites?

Each provider tracks a different list of coins, counts circulating supply differently and may include or exclude stablecoins. Those choices change the denominator, and therefore the percentage.

Does a higher market cap make a coin safer?

Not in itself. Larger coins tend to have deeper markets, which can reduce slippage, but they have still suffered very large falls. Market cap says nothing about volatility, ownership concentration or the risk of a platform you use failing.

Can market cap go up without anyone buying?

The price only changes when trades happen, but a small amount of buying at higher prices revalues the whole circulating supply. In thinly traded tokens, modest purchases can add many times their value to the market cap on paper.