Fully Diluted Valuation (FDV) is a key metric in the cryptocurrency space, estimating the total value of a project if all tokens were in circulation. FDV provides a broader view of market value.
Why FDV Matters
FDV helps investors gauge the long-term potential of a cryptocurrency. Unlike market capitalization, which only reflects circulating tokens' value, FDV considers total supply, making it essential for evaluating scalability and growth.
How FDV Differs From Market Cap
Market capitalization is calculated by the current price times the circulating supply. In contrast, FDV accounts for total supply, highlighting the potential impact of unreleased tokens. If many tokens are locked or reserved, FDV might exceed the market cap, a crucial point for future value assessment.
How Token Supply Affects FDV
Changes in token supply directly impact FDV. More tokens released mean a higher FDV, potentially diluting existing tokens' value. Monitoring tokenomics such as vesting schedules and staking rewards is vital as they influence both FDV and market cap.
Ignoring FDV can lead to poor investment decisions. Projects with low market cap but high FDV might appear undervalued. However, unlocking many tokens may drop prices. Investors should consider FDV alongside other factors.
