Market capitalization
In this world today, people seem to much involve in crypto currencies and also not to forget the fintech. but many people still not know how to measure or ranking their best of crypto currency.
Market capitalization -marketcap
market capitalization is refer to the total Dollar market value of the company's out standing shares. The investment community use this figure to determine the company size and asset figures.
Outstanding shares X Shares Value = Market Capitalization example : 100 000 X 10$ = 1 000 000$
When market price shares is rising, then the marketcap follow rising soon. This marketcap will easily for us to determined the company value.
The company with share value is lower does not mean it has lower market cap. it could be higher if the out standing shares is much.
example 2 00 000 X 6$ = 1 200 000$
Below is the example that how this crypto currency was determined it ranking. that is how if we see that ripple is on the top 3 although it have lower value. but it have more shares compare to Litecoin.
SOURCE: https://coinmarketcap.com/
Market cap will make a quick decision the investor about the company. it will tell how company is worth. Usually investor will classify into 3 group in order to diversify their portfolio. small cap,medium cap, big cap.
Small Cap
These company usually have market value between 500$ to 2 bil usd
people will investing on this small cap company in order to have greater return. Buying when it small. sell when it big. that it how to invested right. But this small company of Couse need more reputation and stability in order to sustain their business. otherwise it will collapse and also will impact hte investor as well.
Mid Cap
These company usually have market value between 2bil usd to 10 bil usd.
These company usually gradually well known. At this this stage more people are tend to invest to the company. This is the best way company to diversify our portfolio as an investor.
Big cap
Large cap usually refer to market that have more than 10 bil usd of the market capitalization. Most investor believe that Big market cap is the safer but the growth is not best as mid and small cap.
So by this, what we need to do as investor is, we need to diversify our portfolio. Always diversify your portfolio within the capital that you have get. It depend on everybody which is the best ratio that suit for themself in diversify thier portfolio.
| Type investor | Big cap | Mid Cap | Small Cap |
|---|---|---|---|
| Low Risk | 50% | 25% | 25% |
| Medium Risk | 25% | 60% | 15% |
| High Risk | 15% | 15% | 70% |
The table above is just an illustration. depend which type are u. i generally use to medium risk. Like what warren Buffet Say. "never lose Money"
good luck in crypto world.
