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Crypto Market Capitalization and Fully Diluted Valuation Explained
Author: Catherine
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Resources that help traders and investors analyze cryptocurrency projects often showcase market capitalization along with another metric: fully diluted valuation (FDV). What is the meaning of FDV in crypto and how to use it? Learn in this article by the ChangeHero team!

Key Takeaways

For Reference: Market Capitalization in Crypto

Before we explore the meaning and implications of the fully diluted valuation metric in crypto, let’s review another crucial and ubiquitous term: market cap.

In stocks, market capitalization, or market cap, is a measure of corporate assets, calculated by multiplying the number of outstanding shares by the stock’s current market price. It is not a precise measure of the total value of a company but still a useful subjective metric.

Similarly, in crypto, the market cap is the number of coins or tokens in the circulating supply multiplied by the current market value. It is important to remember that market cap does not necessarily correspond to objective reality: it changes with the asset price, which can be volatile. Nevertheless, it is a simple yet effective metric to give us an idea of how valuable a crypto asset is perceived as a whole.

Learn more: Primer on Market Cap Dominance, Bitcoin Dominance (BTC.D) & The Flippening

What is FDV in Crypto?

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By definition, market capitalization is derived from the number of shares outstanding or the circulating supply. It is handy when assessing the current state of an asset but not so much when it comes to more forward-looking analysis. This is when fully diluted valuation (FDV), also called fully diluted market cap, comes in.

How Does FDV Work?

In stock trading, to get the maximum supply of a company’s shares, traders assume all convertible assets, such as options and warrants, are exercised and turned into common shares. Knowing the maximum supply of a crypto asset is a bit easier than that: it is a part of the protocol’s or smart contract’s code.

Fully diluted valuation is calculated by multiplying the maximum supply of an asset by its current market price. Like the market cap, it is a subjective measure of value but sufficient to estimate the potential impact of a cryptocurrency project.

For example, it is widely known that the maximum supply of Bitcoin (BTC) is limited to 21 million. As of 2024, its circulating supply is 19,694,784 BTC. With the current BTC price of $63,928.56, its current market capitalization is $1,254,956,816,208 but the FDV is $1,338,125,523,000.

Inflationary coins and tokens are another story because of an unlimited supply. In this case, FDV, as opposed to market cap, is calculated with the total supply vs. circulating supply. If total supply is maximum supply minus the burned tokens, circulating supply is total supply minus the locked tokens. This metric is also called a fully diluted basis. For instance, the Solana (SOL) market cap is $68,240,008,146 but its FDV is $87,754,558,306.

What Fully Diluted Valuation (FDV) Tells You About a Crypto Asset

The examples above show that a fully diluted market cap differs from the current market capitalization. What should you make of it?

A fully diluted valuation on its own can provide you with a market cap estimate for the project’s future worth. Knowing the fully diluted market cap helps traders estimate how stable or valuable a coin will be when its supply hits the higher limit. However, the FDV to market cap ratio is arguably even more insightful.

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High FDV relative to the project’s market cap signals more coins or tokens to be released in the future, meaning value dilution and a potential decline in price. Of course, it does not mean that inflationary tokens are exempt from this scenario just because their FDV to market cap ratio is low.

The ratio is also crucial to consider in early crypto investment strategy. A high FDV to market cap ratio is a sign of inflationary tokenomics, and although it is not necessarily a death sentence, it’s still something to keep in mind. A low initial supply may seem attractive but if the FDV is too high, a token will be subjected to volatility due to supply unlocks.


All in all, fully diluted valuation is a metric often overlooked but can be more handy than meets the eye. Keep it in mind whether you are hunting for emerging gems or getting into a long-standing project, and once you make the decision, ChangeHero can help with getting 200+ crypto assets without any hassle!

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Frequently Asked Questions

What’s a fully diluted valuation?

A fully diluted valuation is a method used to calculate the total value of a company’s equity by considering all potential shares that could be outstanding, including stock options, convertible securities, and other instruments that can be converted into shares. This approach provides a more comprehensive picture of the company’s value by factoring in all possible sources of ownership dilution.

What does FDV mean in crypto?

FDV in crypto stands for Fully Diluted Valuation, which refers to the total value of a cryptocurrency project’s market capitalization if all tokens or coins that could potentially be in circulation are included. It accounts for both the current circulating supply and any additional tokens that could be issued in the future through token sales, staking rewards, or mining.

Why is FDV important in crypto?

FDV is important in crypto as it provides a more accurate representation of a project’s potential market value by considering all tokens that could be in circulation. It helps investors and analysts make more informed decisions by understanding the full extent of a cryptocurrency’s valuation.

How do you calculate FDV?

To calculate FDV, you multiply the current price of a token by the total supply of tokens that could ever be in circulation. This gives a more comprehensive view of the project’s market value compared to just looking at the current circulating supply.

What is the difference between FDV and market cap?

Market cap is calculated by multiplying the current price of a token by its circulating supply, representing the total value of the tokens currently in circulation. FDV, on the other hand, considers the total supply of tokens that could be in circulation, providing a more comprehensive view of the project’s market value.

What is the FDV ratio in crypto? What is a good FDV ratio?

The FDV ratio in crypto refers to the Fully Diluted Valuation ratio, which compares a cryptocurrency project’s market cap to its fully diluted market value. A good FDV ratio is subjective and can vary depending on the project, but generally, a lower FDV ratio may indicate potential for growth and undervaluation.

What is a high FDV? Is a high FDV good?

A high Fully Diluted Value (FDV) can indicate a potential for high inflationary pressure and supply dilution in a cryptocurrency. This means that as more tokens are released into circulation, it may lead to a decrease in the value of each token. Investors need to consider the implications of a high FDV on the long-term sustainability and value of the cryptocurrency.

What does a fully diluted basis mean?

Fully Diluted Basis refers to the total number of a cryptocurrency’s tokens that are in circulation or could enter circulation, including those that have been issued, plus any additional tokens that could be created through mining, staking, or other means. It provides a comprehensive view of the maximum supply of tokens that could impact the market and the value of the cryptocurrency.