Fully Diluted Valuation (FDV) is a key metric in the cryptocurrency space, estimating the total value of a project if all its tokens were circulating. FDV provides a broader view of a project's market value.
Why FDV Matters
FDV helps investors gauge the long-term potential of a cryptocurrency. Unlike market capitalization, which takes into account only circulating tokens, FDV considers the total supply, making it essential for evaluating a project's scalability and growth.
How FDV Differs From Market Cap
Market capitalization focuses on the current supply of tokens in circulation, while FDV looks at the full potential supply. Market Cap = Current Price × Circulating Supply, and FDV = Current Price × Total Supply. This distinction is crucial when assessing a project's future value and token release schedule.
Why Investors Prefer FDV
FDV provides insights into the long-term prospects of a token. It allows investors to assess whether a project is overvalued or undervalued relative to its total supply. Changes in token supply directly impact FDV. Ignoring FDV could lead to poor investment decisions, especially if a significant number of tokens are yet to be unlocked.
Staying informed about metrics like FDV helps you make better decisions in the ever-dynamic cryptocurrency market. Whether you're an experienced trader or a beginner, understanding FDV can provide a clearer picture of a project's potential.
