Bitcoin - Market Cap Free Float (USD)

Bitcoin - Market Cap Free Float (USD)

The concept of "Market Cap Free Float" is a more refined nuance of the traditional Market Capitalization (Market Cap) and offers a more accurate perspective of the market value that is truly available for trading.

Think of the overall "Market Cap" as the total value of a theater, including all seats, both occupied and vacant. However, not all these seats are available to be purchased for the next big play, as some are permanent seats belonging to sponsors or are reserved for the team. The "Market Cap Free Float" would be the value of the seats you can actually buy - just those available to the general public.

In the case of cryptocurrencies, "Free Float" refers to the amount of coins that are in the hands of the general public and can be traded on the open market. It excludes coins held by founders, companies, or large investors who don't intend to sell them soon (known as "hodlers"), and coins that are locked in smart contracts or lost.

This indicator is crucial for investors and analysts because:

  1. Realistic Supply: It provides a more realistic picture of the supply that is actually circulating and available for trading, which can affect the price.

  2. Volatility: A low "Free Float" can mean that the cryptocurrency might be more volatile, as a smaller amount of available coins can lead to larger price fluctuations with small changes in supply and demand.

  3. Liquidity: Indicates the liquidity of the asset. A high percentage of "Free Float" suggests that it's easier for investors to buy and sell without affecting the price.

  4. Investment Valuation: Helps investors better assess the risk and real value of a cryptocurrency, by considering only the coins that can be effectively traded.

Therefore, "Market Cap Free Float" is a valuable tool for assessing how easily a cryptocurrency can be traded and for understanding the true market forces at play.