Fully Diluted Valuation (FDV) is a crucial metric in the crypto space, estimating a project's total value if all tokens are in circulation.
Why FDV Matters
FDV helps investors gauge the long-term potential of a cryptocurrency. Unlike market capitalization, which only reflects the value of circulating tokens, FDV considers the total supply, making it an essential tool for evaluating a project's scalability and growth.
How FDV Differs From Market Cap
While market capitalization focuses on the current supply of tokens in circulation, FDV considers the full potential supply. Market Cap is calculated as Current Price × Circulating Supply, whereas FDV = Current Price × Total Supply. This distinction is crucial when assessing a project's future value and token release schedule.
Risks of Ignoring FDV
Overlooking FDV can lead to poor investment decisions. A project with a low market cap but a high FDV might seem undervalued. However, if a significant number of tokens are yet to be unlocked, the influx could lead to price drops. Investors should always consider FDV alongside factors like adoption, utility, and token distribution.
Staying informed about metrics like FDV helps in making better decisions in the ever-growing cryptocurrency market. Regardless of your experience level, considering FDV can offer clearer insight into a project's potential.
