Liquidity, Market Cap & Price
Price, market cap and liquidity are related, but they are not the same thing. This distinction changed how I understood crypto.
About a 2–3 minute readPrice
A token’s price is the value currently being quoted for one unit. In a decentralised market, that price can be influenced by the balance of assets in a liquidity pool and by trading activity.
A displayed price does not guarantee that every token could be sold at that price.
Market cap
Market capitalisation is usually calculated by multiplying token price by the relevant token supply.
Liquidity
Liquidity is about how easily an asset can be traded without causing a large change in price. More available liquidity generally allows larger trades with less price impact.
Why the difference matters
A token can show a large-looking market cap while having very little liquidity. That means the headline number may bear little resemblance to the amount that holders could actually realise by selling.
Building Griff Coin taught me not to look at market cap in isolation. The liquidity pool and price impact told me far more about what the market could actually handle.
Treat headline numbers carefully
Crypto dashboards can make numbers look precise, but the underlying market can be thin and volatile.
You’ve learned the basics
That is enough for now. Pick another short guide when you are ready.
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