Right. On the one hand, we're comparing the U.S. dollar value of all crypto-assets, and on the other hand we're counting the amount of paper currency and coinage.

Given that crypto-assets do not have a physical form, why compare on this basis?

Well, that's obvious. If you look at a more-comparable monetary stock measures (say, M2, which includes dollars in checking, savings, small time-deposits and liquid money market funds) you find that the U.S. dollar number is more like $20tn and it looks a lot less exciting.

Let's also ignore the fact that the "market cap" of a crypto-asset in U.S. dollar terms is not a cash equivalent because, and let me go out on a limb here, if you tried to find a buyer for every bitcoin in circulation your VWAP would not be the current spot price.