Crypto Market Cap and Bitcoin Dominance, Explained

Market capitalisation

A coin's market capitalisation is its price multiplied by its circulating supply, the number of units that exist and can be traded. It is the same measure as a company's market value, and it ranks the market: Bitcoin first, Ether second, and a long tail behind them. The total crypto market cap is the sum across every coin, and it is the figure quoted when the market as a whole is said to be worth so many trillion dollars.

Supply is the part that needs care. Bitcoin's supply is fixed by its code at 21 million, of which more than 19.7 million had been issued by 2024, so its market cap is close to its maximum possible value at any price. Many other tokens have a circulating supply far below their total or maximum supply, because large allocations to founders, investors and foundations unlock over years. For those, the fully diluted valuation, price times maximum supply, is the number to compare with the market cap:

Market cap = Price × Circulating supply

Fully diluted valuation = Price × Maximum supply

A token whose fully diluted valuation is five times its market cap has four units waiting to be sold for every one that trades today. The unlock schedule is as much a part of its price outlook as anything on the chart.

Bitcoin dominance

Bitcoin dominance is Bitcoin's market cap as a share of the total. It has ranged between about 40% and 70% over the last decade and is read as a gauge of where risk appetite sits within crypto. Rising dominance means Bitcoin is outperforming the rest: either a rally that Bitcoin is leading or a sell-off in which the smaller coins fall faster. Falling dominance means the smaller coins are outperforming, which happens in the later, more speculative phase of a rally that traders call altseason.

Stablecoins complicate the ratio. Tokens pegged to the dollar are a large and growing share of the total market cap, and because their value does not move with the market, a rising stablecoin share lowers Bitcoin dominance without any change in Bitcoin's standing. Some measures exclude them; a dominance figure should say whether it does.

Volume

Daily volume is the value traded across exchanges in 24 hours, and it is the least reliable of the headline figures, because some venues have reported trades that did not happen. Volume figures from exchanges with audited or independently verified reporting are the ones to use, and the ratio of volume to market cap, turnover, is a measure of how actively a coin trades relative to its size.

A market that never closes

Crypto trades 24 hours a day, every day of the year. There is no opening auction, no closing price in the exchange sense, and no weekend. Daily candles are usually drawn to 00:00 UTC by convention, and that is the only sense in which the market has a day. Liquidity follows the people: it is deepest when the United States is awake and thinnest in the early hours of Sunday UTC, and the largest moves of a week often come at the weekend, when a smaller book meets a piece of news.

Perpetual futures, which never expire, carry most of the speculative volume, and their funding rate, the periodic payment between longs and shorts that keeps the contract at the spot price, is the market's most watched positioning gauge. A high positive funding rate means longs are crowded and paying to stay in; it is where sharp liquidation cascades begin.

Bitcoin's supply schedule halves the reward to miners every 210,000 blocks, about every four years, most recently in April 2024. The halving cycle has coincided with the market's major cycles so far, which is why it is on every crypto calendar, though with each one the new supply becomes a smaller share of what already exists.

Correlation with everything else

For most of its history Bitcoin traded on its own factors. From 2020 it traded increasingly with the Nasdaq, rising and falling with technology stocks and with the liquidity conditions set by central banks, and in 2022 it fell with them. Whether it is a risk asset or a store of value has been answered differently in different years, and the correlation is worth checking rather than assuming.

On the desk

The crypto page lists the top hundred coins by market cap with their 24-hour and seven-day moves, volume and dominance, around the clock, and the Bitcoin notebook applies the desk's weighted-evidence method to the largest coin every minute.