This value is the product of the number of coins in circulation in the market and the current market price of one coin at any given point of time.
However, this value should not be taken as written on the stone. Instead, it should be considered as a rough estimate of the stability of the coins and the likely value of it.
On the other hand, crypto coins with a smaller market cap will be more vulnerable to the whims and fancies of the crypto market, which, as you may know already, is extremely volatile.
Therefore, it is the market cap that determines how big a gain or a dramatic loss is in the wake of a specific crypto coin.
However, the value can vary depending on the method used to calculate it.
Sometimes it may be calculated on the basis of the fully diluted number of the coins but most of the times it is calculated on the basis of the current coin supply circulating in the market.
With all these complications in it, articles like this will prove to be extremely helpful to understand market cap and the growth potential of a crypto coin properly.
How Big Can Crypto Market Cap Grow?
So, market cap is the most important parameter to measure the growth and potential of a crypto coin.
Now, the question is how big can it grow in the first place to determine eventually how worthy a crypto coin is to invest in.
Well, for that you will look into things much more closely and this article will guide you through the entire process.
Typically, when you know the market cap of a crypto, you can do a lot of things with it.
You will be able to compare the value of two crypto coins and with one another and make more informed investment decisions.
Apart from that, this particular metric will also allow you to know other important aspects of the crypto coin and the market that will also influence your final investment decisions.
Some of these aspects are:
- The current trend of the crypto market
- The stability of a particular crypto coin and more.
When you compare these aspects with your own financial health, it will be much easier for you to weigh the risks inherent in making a crypto investment.
Most importantly, when you know the market cap, you will be able to classify all the different crypto coins into specific categories by yourself and determine which particular category is most suitable for you to invest in.
Typically, crypto coins can be classified into three major categories based on the market cap. These are:
- Large-cap crypto coins – This category includes those major and more popular crypto coins such as Bitcoin and Ethereum. With a market cap of multiples of millions of dollars, more than $10 billion for example, the crypto investors consider these coins to be low-risk investments. These coins have a proven track record for growth and also offer high liquidity which means that people can cash out in large numbers but still the price of the coins will not be impacted dramatically.
- Mid-cap crypto coins – These are those particular crypto coins that have a middle-range market cap, within $1 billion and $10 billion for example. These coins are considered to have higher risk than the large-cap coins but also have more potential that is usually untapped.
- Small-cap crypto coins – These are those coins that have a low market cap of less than $1 billion for example, and are often less traded and less known. These particular crypto coins are more susceptible to dramatic price swings which depend largely on the market sentiment which is one specific reason for its low trading volume.
Now, talking about the market trends, considering the market cap of a coin you can assume the level it may hit in the future.
Bitcoin, for example, can hit $100,000 soon in spite of its rocky start this year, according to the market experts.
As it is, volatility of the crypto market is nothing new and a lot of crypto coins, just as Bitcoin, have had a steady rise in their value over the years.
Therefore it is natural for a crypto investor to wonder how far it can go ultimately.
However, unfortunately, the price of Bitcoin and others that are more established is quite difficult to predict because these are even more vulnerable to market factors.
That is why the experts suggest that all crypto investors should be very cautious with their crypto investment decisions.
Now, coming back to the question of how big the market cap of crypto can grow, here is what can be assumed.
In US dollars, this figure can be anywhere near to $300 trillion in cash wealth considering all platforms and players.
This includes a daily circulation and settlement ranging between 13 and 30 trillion and the total wealth of $280 trillion held by individuals, businesses and governments.
This is the potential market capitalization of crypto provided that fungibility, good faith, and the math are durable and the people are okay with the fact that the value need not be tied to a promise of redemption or to a government.
However, this is all theoretical. It is not quite realistic that the value of crypto coins will be as big as the value of fiat money in the world.
Practically speaking, the crypto market does not have a true upside limit and therefore can become the biggest financial market in the world with the market gaining attention and traction continuously fuelling its further growth.
All these factors make it quite difficult to say precisely how far the crypto market cap could grow.
In fact, a few experts say that the possibilities of making such predictions are literally zero.
The crypto coins do not have any intrinsic value in the first place that will help in making a proper and accurate calculation.
Bit about Market Cap
Without going into the complexities of the theoretical definitions and jargons of the market cap of crypto, an example will help you to understand about it in a much better way.
Take two fictional cryptocurrencies for it, Crypto A and Crypto B.
If there are 400,000 Crypto A coins circulating in the market right now and every coin is worth $1, then its market cap will be $400,000.
On the other hand, if there are 100,000 Crypto B coins circulating in the market each of which is worth $2, then the market cap of it will be $200,000.
Now, in terms of market cap, or the overall value of coins, that of Crypto A is double than the value of Crypto B.
However, in terms of price of each coin, that of Crypto B is double the price of each Crypto A coin.
And, this value or market cap can change significantly and very quickly because prices of crypto coins swing dramatically due to the excessive volatility of the market.
Still, knowing the market cap of crypto is very important because it helps the investors to determine the value of the coin before making any investment decision.
Though the price of a crypto coin is a good parameter to determine the value of a coin, knowing the market cap will provide a clearer picture and a complete story of the coin.
This will help the investors further to compare its value across other different crypto coins to make an informed investment decision eventually.
This will prove to be the key statistic that will indicate the growth potential of the crypto coin and help in deciding whether it is safe and secure to buy and invest as compared to other crypto coins available in the market.
Reasons for Growth
The growth of a crypto coin typically depends on some external factors such as the announcements made by the Federal Reserve.
This can be an order to increase the interest rates or any other specific executive orders on cryptocurrencies related especially to its regulation.
This is not entirely bad, the experts say, because it will give more stability to the crypto coin as well as the crypto market on the whole in the long run.
Growth of a coin and its market cap in the process is also dependent on the current political environment of the country as well as that of the other countries in the world.
For example, the war between Russia and Ukraine has offered some additional volatility to the crypto market and with no end in sight, it is likely to bring in more volatility to the crypto market in the following days, experts opine.
Moreover, new coins keep on coming out adding to the total market cap continuously and more and more companies are launching new ICOs or Initial Coin Offerings that adds to the momentum which shows no signs of abatement.
Add to that, major companies are dumping more and more money into this market and the retail speculators are risking everything to earn profits from this space that has no upside limits.
All these facilitate further growth of the market.
Prices of crypto coins, as said earlier, can rise or fall significantly in quick time.
This makes any type of predictions on the crypto market quite tricky.
On one hand, the most extreme crypto critics may say that the price of a crypto coin may fall down to as low as $10,000 in a specific period of time.
On the other hand, an average crypto investor may say that the price of the same crypto coin will climb up to $100,000 but may be on a much slower time scale.
Such discrepancies are not unusual because the bullish experts and major corporations are always on the lookout to monetize their goods in the digital metaverse.
The world has seen the growth of metaverse worlds, games, experiences, and products.
All these have resulted in the growth in popularity of the Altcoins.
This has in turn changed the sentiments of the investors regarding crypto, whether it is Bitcoin the original crypto or any other coin available in the market.
As a result, several experts are hesitant and very apprehensive to predict a definite value and a date.
Instead, they are more comfortable at pointing out a trend of the rising value of crypto over time.
As for the investors, they want a pretty sustainable rise in the value of crypto over time.
This, they think, should be based on the organic market movement and for the long term.
They ideally want volatility in the prices in the short term and growth in value and potential in the long term.
Now, there are several factors to predict the price of crypto coins that will meet the demands of the crypto investors.
These factors include the normal economic parameters that are applicable to any other type of currency or financial investment such as:
There are also a few other important factors to consider to predict the price of a crypto coin accurately, or as accurately as possible. These are:
This is one of the most significant factors that help in predicting the price of a crypto coin.
The prices of crypto are certain to rise as more and more people explore this exciting space and engage in buying and selling the coins.
At the fast rate crypto is being adopted now by the people, the prices of Bitcoin and other coins are expected to be pushed even higher and higher.
As for Bitcoin, reports say that the annual rate of increase in its adoption is a staggering 113%.
In comparison to the adoption of the internet, it is 50% higher according to the report of CoinShares, a digital asset management firm.
At this rate, experts believe that the number of users of Bitcoin all over the world will be more than 1 billion by the end of 2024 and over 4 billion by the end of 2030. Get the difference and the point?
This will surely have a positive effect on its prices as well as that of the other crypto coins.
It has been made very clear by the Fed officials that they are having a close look at crypto.
This will have a lagging effect in terms of the price of crypto coins, Bitcoin in particular.
Recently, President Joe Biden has signed an infrastructure bill.
It is clearly indicated by the Treasury Secretary Janet Yellen.
All these regulations when imposed on all crypto coins will surely impact the value of crypto, which is a new asset class like.
For example, the ban on crypto by China in September 2021 saw a sharp decline in the price of Bitcoin which gradually rose thereafter.
Naturally, regulations on crypto will bring up a lot of questions along with it.
Typically, the Fed officials, the Securities and Exchange Commission or SEC in particular, is considering it seriously and making decisions on a case-to-case basis.
This, however, the crypto experts term as the ‘crawl, walk, run’ strategy toward adoption of crypto to become mainstream.
Finally, the mining cycle is another significant factor that influences the prices of crypto.
This cycle is known as halving. This is quite a complex matter and is algorithmic in nature.
In simple words, this is the process in which the rewards offered to the miners for their computational power or effort put in for validating transactions and upholding security of blockchain is cut in half.
This is done usually after 4 years in the case of Bitcoin mining but, historically, halving correlates with the boom and bust cycles.
This process regulates the rate at which new coins come to the market and start circulating.
This eventually impacts the price of the coins.
Crypto experts and market analysts have different opinions about the market cap and value of crypto, both in the monetary aspect and other perspectives.
But before moving on to their comments, it is good to know what all of them have to say to the investors.
This is something that they all agree in unison and want every crypto investor ought to know.
The crypto experts and financial planners advise the investors to be well aware of the price fluctuations and do their due diligence and research before investing, just as they do with any other type of financial investments.
At no cost or circumstance they should allow emotions to influence their investment decisions.
And, you should also pick basically sound crypto coins that will provide good returns in the future and not simply follow a fad.
This is important because the hyped coins will not stay for a long time and leave you at a loss.
They also warn the investors against investing more than they can afford to lose in crypto, once again due to its extremely volatile nature.
In fact, they suggest that crypto should not make more than 5% of their overall investment portfolio.
This will not leave them stranded and penniless if the crypto market crashes, which is a probability that cannot be eliminated completely.
Volatility of crypto makes it hard for any average person to know the whats and whys behind a crypto investment strategy.
However, it is extremely important to know these because it will allow you to stay focused especially if you are new to this relatively new asset class.
That is why the experts suggest following a ‘wait and see’ approach to know how exactly things unfold or would unfold in the future before you put your hard-earned money on the line.
This is very important, they say, because you will have historical data of only 10 years to refer to with lots of ups and downs in it.
This will make price predicting quite a difficult task.
Ideally, when you are investing in crypto, you should know your expectation clearly and to what extent you can accomplish that from the product you wish to buy or invest in.
You should know whether you need crypto in your investment portfolio in the first place. In most of the cases, the answer would be a clear NO.
Idyllically, the experts look at the past records to predict the price of a crypto coin in the future.
If you follow the same process you will see that every year there has been a wild swing in the market cap but eventually the trend has been up in the long term.
Not just up, but in fact, quite aggressively up.
According to that rule, as of now the crypto market is pretty down from the all time highs.
Therefore, there is a high chance that the market cap will be significantly higher than what it is now within 6 months to a year and a half.
By that time there will be more regulatory transparency in the crypto industry which will pave the path for the major institutional investors to step into the market.
Now, here are some predictions and comments of a few experts on Bitcoin that may help you a lot in making your final decision.
Since most of the other crypto coins follow Bitcoin trends, you can have some idea about their prices as well.
Different as these comments may be, do not think that the experts are biased about crypto.
This Bitcoin investor and the founder of Token Metrics, a crypto research and media company, predicts that the price of Bitcoin can reach anywhere between $100,000 and $150,000 but the time is not clear.
With Web 3, the new internet built on blockchain, others have outdone it in innovation and the launch of new Altcoins and the hype surrounding the metaverse will continue to push the demand for crypto coins and therefore Bitcoin will bounce back.
Matthew Hyland – Technical and On-Chain Data Analyst
Mathew expects the price of Bitcoin to reach $100,000 in 2022.
He says that the price of Bitcoin in January 2022 was almost equal to that in January 2021.
However, the latest trend of Bitcoin supply leaving key exchanges and stored in offline wallets and the rise in demand of new Altcoins could result in a dip below $40,000 which may direct to a free fall into a Bitcoin bear market.
Robert Breedlove – Founder and CEO of Parallax Digital
Robert predicted that the price of Bitcoin would be $307,000 by October 2021, which has now passed, and the market cap would be $12.5 million by 2031. However, his predictions, quite evidently, have not been spot on.
Breedlove, who is believed to have a more philosophical approach, believed that the price of Bitcoin will be pushed up higher than all its past records.
He emphasized on the wider social implications of crypto due to its transparent and decentralized nature.
Ivory Johnson – Founder of Delancey Wealth Management and Certified Financial Planner
Speaking broadly on the crypto market, he holds the view that crypto will disrupt conventional financial systems.
The main reason behind this, according to him, is the ability of crypto to transfer payment most efficiently and quickly across borders, in comparison to the traditional financial system, at a very low cost.
It is not affected by foreign currency price fluctuations. He says that if Bitcoin is not unseated by a technology that is better than what it is now, it will surely become the reserve currency of the world pretty soon.
Frederick Kaufman – Journalism Professor and Magazine Writer
The author of “The Money Plot: A History of Currency’s Power to Enchant, Control, and Manipulate,” Frederick assumes that dollars will have more in common with crypto coins than with gold or silver much before 2071.
He suggests that it is all due to the undisputed longevity of the encrypted algorithms which will give crypto a store of value and may even make it a reliable medium of exchange as the world moves on to a digital universe.
Dan Egan – Vice President of Behavioral Finance and Investing at Betterment
Daniel says that all crypto coins like Bitcoin have the potential and ability to prove them very useful for speculation and money movement.
These coins with their utilities and special abilities are not going anywhere.
However, Daniel is concerned about the ways and from where the huge amount of resources required to run crypto will be generated to meet the growing demand of these digital coins.
He is also worried about the perspectives of the state actors who consider this digital asset class as the competitor to fiat currency. This, he thinks, may eventually make crypto a commodity for the black-market.
Apart from these experts, even the major financial institutions also make their own predictions about the crypto prices.
For example, JPMorgan predicts a high of $146,000 in the long term whereas Bloomberg predicts it to hit $400,000 provided the rate at which it is climbing up remains constant.
On the other hand, Goldman Sachs predicts that the global crypto market cap will be up 100 times to reach $250 trillion from nearly $2.5 trillion by the end of this decade provided that the crypto network adoption model follows the current trajectory and the user base hits 3.5 billion by then.
Other experts think that it will need a lot of support from the top institutions as well as from the government apart from massive adoption for crypto to reach that mark. They also say that there is no linear trajectory to determine the market cap.
However, nothing is impossible because crypto adoption will surely rise exponentially since it will give better returns in the coming years, as it has already started to give, as compared to other equities and gold, according to some experts.
The crypto market is extremely volatile and therefore guessing a market cap for a specific period in time is quite risky.
Even the most intelligent analysis can be wildly off. However, this article has tried the best to make you knowledgeable about it.