Market cap is roughly price multiplied by circulating supply. It is a quick way to compare how large an asset looks in dollar terms. It is not cash sitting in a treasury, and it is not the amount you can sell into the market tomorrow without moving price. Circulating supply assumptions matter as much as the last print, and two data vendors can disagree on the same ticker if they count float differently.
Why it matters
Price alone misleads. A coin can look expensive per unit and still be small in total value, or cheap per unit and already huge. Market cap helps rank size before you compare narratives. Pair it with liquidity so you do not confuse valuation with tradable depth or assume a large label means an easy exit.
Supply definitions create traps. Locked tokens, staking, and slow unlocks change what circulating really means. Desk habit is to check the supply method, note unlock calendars, and compare market cap with fully diluted valuation when emissions are large. Without that check, a tight float can look scarce while the roadmap still schedules heavy selling pressure.
Market cap also shapes risk framing. Moving a mega-cap usually needs broader flows than moving a micro-cap. That does not make large caps safe. It only changes how much participation a move may need. Always timestamp the price and supply inputs you used so later reviews compare like with like.
Example
Two tokens trade at the same dollar price. One has ten times the circulating supply of the other, so its market cap is ten times larger. Ranking them by unit price alone would hide that gap and distort any size comparison. Adding an FDV check and a live book check keeps the ranking honest before capital is committed.