Calculating the market cap is useful because it gives you an indicator of a cryptocurrency's popularity and its strength against its competitors. The market cap allows you to compare cryptocurrencies that have different prices and different amounts of coins in circulation. Market cap does not tell you how much potential a cryptocurrency has, but it does indicate how much potential other people think it has. As a general rule, cryptos with a larger market cap will be better know and therefore easier to buy and sell. When there are fewer buyers and sellers it means that the crypto is less liquid and it may take a longer time for the trading platform to match your buy and sell orders. Alternatively, you might be looking to get in on the ground floor and be searching for the crypto with the lowest market cap. You can of course use the same formula to do this. Watch out! As the market cap is an assessment based on coins in circulation and coin valuation, it is an indicator that fluctuates at the same speed and with the same unpredictability as the market itself. While it can be a good way to step back and take a look at the bigger picture, that is all it can ever provide: a snapshot of the market at a specific point in time.