Market cap, volume, and volatility

Three numbers appear beside every coin on a price site: market cap, volume and price change. Each one is useful and each can mislead. This lesson shows how to read them.

Market cap

Market capitalisation is the price of one coin multiplied by the number of coins in circulation.

A coin's price alone tells you nothing about its size. Compare two made-up coins:

Coin A is not cheap and Coin B is not expensive. They are the same size. For Coin A to reach $1, its market cap would have to reach $100 billion.

Market cap is also not the amount of money invested. It is the latest trade price applied to every coin. A small trade at a high price can lift the figure by millions.

Circulating supply and what is still to come

Price sites show several supply figures:

• Circulating supply: coins available to trade now
• Maximum supply: the most that can ever exist, if there is a cap
• Fully diluted valuation: the price multiplied by the maximum supply

If only a tenth of a token's supply is circulating, the rest is waiting to be released, often to the team and early backers. Those releases add to supply and can push the price down. A large gap between market cap and fully diluted valuation is a warning to look closer.

Volume

Volume is the value traded over a period, usually 24 hours. Higher volume generally means you can buy or sell without moving the price much. That ease of trading is called liquidity.

Reported volume is not always real. A 2022 study of unregulated exchanges estimated that wash trades, where a trader buys from themselves to fake activity, averaged over 70% of reported volume. Treat volume on obscure exchanges with caution.

Volatility

Volatility describes how sharply a price moves. Crypto is far more volatile than shares or currencies.

• Bitcoin hit $19,783 in December 2017. A year later it dipped below $3,300, a fall of more than 80%.
• After a record above $120,000 in 2025, it traded near $60,000 in February 2026.

Smaller coins usually swing harder than bitcoin, and many never recover.

One piece of arithmetic is worth remembering. After a 50% fall, a price must rise 100% to get back to where it started.