Fully Diluted Valuation (FDV) is a key metric in the cryptocurrency space, estimating a project's total value if all tokens were circulating.
Why FDV Matters
FDV helps investors gauge the long-term potential of a cryptocurrency. Unlike market capitalization, FDV takes into account the total supply, providing a broader view of a project's market value. For example, if a large portion of tokens is yet to be released, FDV highlights potential risks or rewards tied to future supply changes.
How FDV Differs From Market Cap
Market capitalization focuses on the current supply of tokens in circulation, while FDV considers the full potential supply. For instance, the SUI token's FDV at a current price of $2.18 with a total supply of 10 billion tokens is $21.87 billion. This distinction shows how FDV can vastly exceed market cap with a high volume of unreleased tokens.
Risks and Advantages of FDV Analysis
FDV analysis provides insights into a token's long-term prospects. A high FDV without sufficient utility might signal overvaluation, while a low FDV with strong fundamentals could indicate growth potential. Ignoring FDV can lead to poor investment decisions since increased token circulation can affect price.
Metrics like FDV assist in making informed decisions in the dynamic cryptocurrency market. Considering this metric offers a clearer picture of a project's future potential.
