What market cap measures
Market cap — short for market capitalisation — is the total market value of a crypto-asset at a moment in time. It is calculated as circulating supply × current price. A token with 100 million units in circulation trading at $5 has a market cap of $500M. The number is the first thing almost everyone checks when sizing up an asset, which is fine as a first cut and dangerous as a stopping point.
Used carefully, market cap tells you:
- Rough size, in the order-of-magnitude sense.
- Comparative scale across assets — two tokens at $500M and $5B are in different leagues regardless of price-per-unit.
- The pool of capital that has chosen to be in the asset.
Used carelessly, it pretends to tell you things it does not — depth of the trading layer, real demand, holder distribution, whether the asset can absorb a sell order without breaking. Those are different questions and need different measures.
The supply problem
The "circulating supply" leg is where most market-cap mistakes happen. For traditional equities, shares outstanding is reported and audited. For crypto, the equivalent number is squishier:
- Maximum supply. The hardcoded ceiling, if any. Bitcoin's max supply is 21 million; some assets have no max.
- Total supply. What has been minted to date.
- Circulating supply. What is freely tradeable now — total minted minus locked, vested, or project-treasury holdings.
The boundary between locked and circulating is judgement-dependent. A vested allocation that unlocks next month is not freely tradeable today, but it will be. A foundation treasury balance may or may not be counted, depending on policy. Different data providers use different conventions, which is why two reputable sites can show different market caps for the same asset.
Fully diluted valuation (FDV)
A second metric: FDV = max supply × price. It answers "what would the cap be if every token that will ever exist were already trading?". For young assets with most of the supply still locked, FDV is much larger than market cap, and the gap matters — every unlock is incremental sell-side pressure.
A useful read on a young asset is to look at both. A large gap between cap and FDV signals future unlock pressure; a small gap means most of the supply is already in the market.
Market cap and Sharia screening
Cap is one input among several into the screening universe — not a verdict on its own. The published halal methodology interacts with cap in two ways:
- Universe segmentation. Conservative tier restricts to top-tier liquid majors; Moderate and Multi-X widen the universe. Cap floors are part of the segmentation per tier.
- Concentration caps. Single-asset exposure as a percentage of deployed capital is bounded per tier. The bound interacts with cap in the sense that very-large-cap assets are easier to size into without violating it.
Cap is not a substitute for the business-activity, financial-ratio, or execution screens. A coin with a $5B cap that fails a business-activity gate is excluded; a coin with a $500M cap that passes all gates is in the universe.
Cap and stablecoins
Stablecoin cap reads differently. For a stablecoin, the cap is approximately the issuer's outstanding liability — every $1 of cap corresponds to $1 the issuer has issued and (in a fully reserved model) is holding in collateral. Cap therefore reads more like a treasury balance than an equity-style market value. The screening-relevant feature is reserve composition — interest-bearing reserves change the screening verdict on the stablecoin, even when the holder is not paid the interest.
Quick reference
- Market cap = circulating supply × price.
- FDV = max supply × price; large FDV/cap gap = unlock pressure.
- Cap is a sizing input, not a verdict.
- Cap and liquidity are not the same number.
- Stablecoin cap reads as outstanding liability, not equity-style value.