Why do spikes occur in crypto market capitalization and dominance charts?
On the platform, you can find indices with aggregated market capitalization and dominance under the CRYPTOCAP: prefix. Please check this solution to learn more about such symbols.
The composition of these indices varies depending on the current cryptocurrency rankings by market capitalization. As rankings change, some coins may be added to the calculations while others may be excluded.
This dynamic adjustment can lead to spikes on the charts for the following reasons:
- Changes in the composition of the top-125 cryptocurrencies by market capitalization: for instance, when a coin enters or exits the top-125, it is added to or excluded from the calculations of aggregated indices. This results in changes to the total market capitalization, which directly impacts the aggregated market capitalization.
- Changes in the DeFi Category (relevant only for TOTALDEFI and TOTALDEFI.D): if a cryptocurrency is reclassified as DeFi or no longer fits this category, it also affects the calculations and will be reflected on the charts.
If a coin with substantial market capitalization is added to or excluded from the composition of a symbol, it can cause noticeable spikes. Major spikes can be manually smoothed at a later stage.
When analyzing data, these factors should be considered to interpret any spikes or changes observed in the graphs accurately.