Equity Risk Premium
The ERP is a measure of cross-asset valuation. It tells you if equities are cheap relative to bonds. High means value, low means cheap.
For equities: Refers to the total monetary value of a company’s shares, calculated as number of outstanding shares * per share market price. Essentially, market cap explains the market value of a company. It is also used to describe the size of a public company, relative to other publicly traded companies. Companies can be segmented into the following categories based on their market capitalization: small-cap ($300M - $2B), medium-cap ($2B - $10B), large-cap ($10B - $300B) and mega-cap ($300B and more). Examples of mega-cap companies include Amazon and Apple.
For crypto: The USD sum value of all the coins that have been mined for a specific cryptocurrency. It’s computed as current supply * priceUSD and based on the daily close price
Market capitalization can be considered a rough gauge for how stable a coin is likely to be - a larger market cap is more likely to be a more stable investment than one with a much smaller market cap. Moreover smaller cap coins are more susceptible to turbulent markets and can see huge gains or losses in such periods.
There are 3 classifications of crypto currencies by market capitalization: Large-cap: coins with a market capitalization > $10 billion. Investors consider these to be lower risk investment because they have a sustainable record of growth and higher liquidity Mid-cap: coins with a market capitalization between $1 billion and $10 billion. These coins are considered to have more untapped potential upside but also come with higher risk Small-cap: coins with a market capitalization of less than $1 billion. Such coins are most immune to dramatic price swings in turbulent markets.
A free-float market cap is the total value of the cryptocurrency, excluding units that are not trading (e.g. lost or locked). Similar to regular market cap, a locally high market cap shows healthy activity and that the overall value of the coin is close to its local highs. A locally low market cap shows the overall value of the coin is depressed.