Market Cap

1. | basic

Circulating Supply × Current Price

2. | medium

The market cap is derive by multiplying the current market rate by the circulating supply.
Market Cap is one way to evaluate how much support a crypto asset has, but it's just one of many factors to consider.
Since market cap is derived by the current price, sudden large changes to the price will cause very large swings in the market cap. That is to say if everyone sold off their assets, the total amount of money coming out would be much lower than the market cap would indicate. As the assets are sold the supply increases, leading to the price to decrease rapidly and the market cap falling. Inversely, when a large amount of a low volume asset are bought quickly, then the price and market cap will rapidly increase as well.

3. | medium

When looking at whether a coin is "cheap" or not, it's vital to consider the market cap. A coin that is worth $0.50 but has a market cap of $20 billion can be valued the same as a coin worth $500 with a market cap of $20 billion, with them having a different the circulating supply.

* All terms and definitions may change as the Cryptionary improves