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One prevalent mistake among novice investors is assessing a coin's value based solely on its price, rather than considering its market capitalization. A beginner might see a coin priced at mere cents and feel tempted to invest, only to overlook the coin’s market cap which gives a more accurate picture of its potential.
For instance, the market cap of Bitcoin, around $2 trillion, is dwarfed by gold's market cap of $17 trillion. With this in mind, it's essential to assess a cryptocurrency's potential based on its market cap, which is calculated by multiplying the price by the circulating supply. This method allows investors to gain insight into a coin's total addressable market and understand its worth relative to larger, more established markets.