What is market capitalization? Methods for evaluating crypto projects to determine profit-taking points

Project evaluation is a key skill for an investor. It helps to find the perfect moments for entry and exit. Market Cap? Perhaps one of the most important indicators in this regard.

1. What is market capitalization?

Market Cap (MC) reflects the total value of the project in the market. It is calculated simply:

Market Cap = token price × tokens in circulation

Circulating tokens are the total supply minus locked and burned tokens. That's how it is.

There is also FDV - fully diluted valuation. It seems a bit confusing, but the essence is that it is:

FDV = token price × maximum token supply

When all tokens are issued and not burned, MC and FDV coincide.

2. Assessment by historical maximum

ATH - the highest price point in history. Strong projects, especially Layer 1 and Layer 2, often return to their highs in a new bull cycle. Makes sense, right?

Let's take a look at Cardano:

• Current market capitalization: $30.1 billion (September 2025)
• ATH: $91.8 billion (September 2021)

The team is not sitting idle. Hard forks. Catalyst programs. Activity is buzzing. With an expected 37.5 billion coins by the end of 2025 and an inflation of 5% per year, one can estimate:

Target price = $91.8 billion / 37.5 billion = $2.45

Not a fact, of course. But it seems true.

3. Assessment relative to the entire market

The entire crypto market is currently worth about $4.16 trillion. Sounds impressive.

But it's a drop in the ocean. The stock market - (trln. 30 times larger! Even one NVIDIA )$4.25 trln$125 is almost equal to the entire crypto market. Funny, isn't it?

If the crypto market grows to ( trillion - a quite realistic scenario considering institutional interest - strong projects could grow by 2.4 times. At least.

4. Comparison with Competitors

This method is simple. We look at similar projects. It is important to compare like with like. Layer 1 with Layer 1. Layer 2 with Layer 2.

For Cardano:

Step 1: Study the technology. The potential is not always obvious.

Step 2: Choose an alternative. Ethereum? Why not. Its market capitalization is about ) billion.

Step 3: We calculate: Target price = $10 billion / 37.5 billion = $9.97

A growth of 3.3 times from the current $3. Sounds tempting.

5. Conclusion

Market Cap is a powerful tool. But it is not a panacea. It is better to combine methods.

Remember, methodology structures thoughts. The accuracy of forecasts depends on your understanding of the project, the market, and macroeconomics. Analytics is not an innate gift. It is a skill. Develop it.

The crypto market is unpredictable. But not for those who know how to count.