Crypto Market Basics: Bitcoin, Altcoins, Stablecoins and Market Cap

Educational content only. This explainer covers basic crypto market concepts. It contains no forecasts or recommendations and is not financial advice. Crypto assets are highly volatile and you can lose all of the money you put in.

Crypto assets are digital tokens recorded on public blockchains. They trade every hour of every day, on exchanges around the world, and their prices can move far more than those of traditional assets. A few basic concepts explain most of what you see in crypto headlines.

Bitcoin, altcoins and stablecoins

• Bitcoin (BTC) was the first cryptocurrency. Its supply is limited by its software to a maximum of 21 million coins, and new coins are issued to miners at a rate that halves roughly every four years in an event called the halving.
• Ether (ETH) is the native token of Ethereum, a blockchain that runs programs known as smart contracts, which power many other tokens and applications.
• Altcoins is a catch-all name for other cryptocurrencies. There are thousands, and many have little use or trading volume.
• Stablecoins are tokens designed to track a currency, usually the US dollar. They are widely used to move money between exchanges, but they depend on the issuer actually holding the reserves it claims.

Market capitalisation

Crypto rankings usually sort coins by market capitalisation: the current price multiplied by the number of coins in circulation. It is a quick way to compare size, but it can mislead. A coin with a small circulating supply and thin trading can show a large market cap that would be impossible to turn into cash. Trading volume and liquidity matter as much as the headline number.

Why crypto prices swing so much

• Risk appetite and liquidity. Crypto often behaves like a high-risk asset: it tends to do well when money is cheap and investors are confident, and badly when they turn cautious.
• Interest rates and the dollar. The same central bank decisions that move stocks and gold can move crypto.
• Regulation and legal news. Rules on exchanges, stablecoins and tokens, and court cases, can move prices sharply.
• Flows into funds. In several countries, exchange-traded products that hold crypto make flows from traditional investors visible.
• Leverage. Derivatives with high leverage are common, and forced liquidations can turn a drop into a cascade.

Exchanges, wallets and custody

Keeping coins on an exchange means trusting that exchange to hold them safely and to let you withdraw. Exchanges have failed and been hacked in the past. A self-custody wallet puts you in control of the private keys, but if the keys or recovery phrase are lost or stolen, the coins are usually gone for good. Whichever you choose, never share a recovery phrase with anyone.

Common risks to watch for

• Scams promising guaranteed returns, fake support accounts and fake giveaways.
• Tokens with tiny liquidity, where prices can be pushed around easily.
• Platforms that are not authorised in your country.
• Tax obligations: many countries tax crypto gains, and records matter.

Crypto headlines are easier to judge once you know what is being measured and who holds the risk. Treat bold price predictions with caution, whatever their source.