Fully Diluted Valuation (FDV) is a critical metric in the cryptocurrency space, estimating the total potential value of a project.
Why FDV Matters
FDV helps investors gauge the long-term potential of a cryptocurrency. Unlike market capitalization, which only reflects circulating tokens, FDV considers the total token supply, making it an essential tool for evaluating a project's scalability and growth potential.
FDV vs Market Cap
Market capitalization focuses on the current token supply, while FDV projects the total value if all tokens were in circulation. This metric helps understand the impact of unreleased tokens on supply and pricing.
Risks of Ignoring FDV
Ignoring FDV can lead to poor investment choices. A project with a low market cap but a high FDV may appear undervalued at first, yet significant token releases could lead to price drops. Investors should assess FDV alongside factors like adoption, utility, and token distribution.
Understanding metrics like FDV helps in making informed decisions in the dynamic cryptocurrency market. Whether you are a seasoned trader or a beginner, analyzing FDV can provide a clearer view of a project's potential.
