Market cap in crypto is a way to estimate the size of a cryptocurrency. It is usually calculated by multiplying the current price by the circulating supply.
Market cap formula
If a token trades at $10 and has 1 million tokens circulating, its market cap is $10 million. This does not mean $10 million in cash is sitting inside the project.
Why market cap can mislead
Market cap does not show liquidity, revenue, usefulness, or safety. A token can have a large market cap but thin trading, insider supply, or weak demand.
Use market cap with other checks, such as supply schedule, token utility, trading volume, network activity, and project transparency.