Market cap vs fully diluted valuation

Market cap is the price of one coin multiplied by the coins in circulation now. Fully diluted valuation, or FDV, is the price multiplied by the maximum number of coins that can ever exist. The gap between the two shows how much supply is still to come.

Side by side

An example

A token trades at $2. There are 100 million in circulation and the maximum is 1 billion.

• Market cap: $2 × 100 million = $200 million
• Fully diluted valuation: $2 × 1 billion = $2 billion

Only a tenth of the supply is trading. The other nine-tenths is waiting to be released, often to the team and early backers.

Why the gap matters

Those releases add to the supply. If demand does not grow to match, they push the price down. A large gap between market cap and fully diluted valuation is a warning to look closer: who holds the unreleased coins, and when can they sell? Lesson 19 turns this into a research question.

For a coin with no maximum supply, there is no fully diluted figure in the usual sense. Look at how fast new coins are created.

What neither number tells you

• Neither is money invested. Both apply the latest trade price to every coin. A small trade at a high price can lift the figure by millions.
• Neither tells you if you can sell. That depends on how much trades each day.
• A low price per coin means nothing by itself. A coin at $0.01 with 100 billion in circulation is the same size as a coin at $1,000 with 1 million.