How to read market cap without fooling yourself

Market capitalization is simple arithmetic: price multiplied by circulating supply. It is a rough measure of how much the market values a network — and it hides at least as much as it reveals.

The formula

If a token trades at $2 and 100 million are in circulation, the market cap is $200 million. That does not mean $200 million is sitting in the asset. It means the last trade, multiplied across every coin, would total that figure — if you could sell them all at that price, which you cannot.

Circulating vs. fully diluted

• Circulating supply counts coins available now.
• Fully diluted valuation assumes every coin that will ever exist is already trading. A big gap between the two is a warning about future selling pressure.

A low price is not "cheap." A $0.01 coin with a trillion-token supply is larger than a $50,000 coin with a few million.

What market cap can't tell you

It says nothing about liquidity, revenue, or how concentrated ownership is. A network can carry a large cap on thin volume, which means the number is fragile. Always read it next to daily volume and holder distribution.