Uhhh that's how it's done everywhere, including currencies and the stock market.... I'm assuming that cryptocurrency is most people's first trading venture. I've traded stocks for 10+ years and you can apply your false logic to anything including a company like Google. Ask just about anyone in the world of finance how a valuation of something is determined and they will point at the market cap.
Given your 10+ years at trading stock, then I assume you pick a stock on more than its market cap. The point is the market cap means nothing, it can dissolve in seconds, and unless there is a basis for it such as earnings per share, or company valuation, it is just an arbitrary number that means nothing in its true value.
As mentioned, the market cap can increase millions, just by a 20BTC purchase depending on walls that are up at the time. I'll agree with you that most people are very new at trading in this realm, and those are the people that most of us make money off of. If only people could overcome greed and illusions of becoming a millionaire with their million Doge, they would be able to slowly accumulate the wealth by playing into the plans of those manipulating the coin.