Market capitalisation is price times circulating supply. It gets used as a proxy for size, for liquidity, for how much selling an asset can absorb — and it is a poor proxy for all three.
Circulating supply is a judgement
Which tokens count as circulating is a decision: locked allocations, treasury holdings, staked supply and burned tokens all get treated differently by different sources. So the same asset can carry materially different market caps depending on who is counting.
And the multiplication assumes every unit could trade at the current price, which is exactly what is not true — the price is set by the marginal trade against available depth.
What float changes
Staking removes supply from ready circulation, sometimes most of it — the case in Cardano. Vesting removes more until it does not, per token unlocks.
A small float against a large notional cap means price is more sensitive to the flow that does occur, in both directions. It flatters the asset on the way up and offers no protection on the way down.
The denominators that actually answer the question
For “can this absorb selling”: depth, and specifically the depth you would exit into. For “how levered is this”: open interest against that depth. For “how much could arrive at once”: concentration.
Each is a real quantity measured against a real constraint. Market cap is a headline that survives because it is easy to compute and ranks well.
Where it is legitimately useful
As a rough size class, and for comparing assets with similar supply structures. It becomes misleading the moment it is used to reason about absorption — which is most of the time it gets used.