Fully Diluted Market Cap: Why It Matters

[Chawla Solutions]

When analyzing tokens, many beginners only look at the current market capitalization. However, Fully Diluted Market Cap (FDV) is just as important — sometimes even more. FDV measures a project’s total value if all tokens were already in circulation, including those not yet unlocked or distributed.

Why This Matters
In many crypto projects, only a small portion of the token supply is actively circulating. The rest is held by the team, venture funds, or early investors. While the current market cap may look modest, the FDV can be five to ten times higher, signaling potential price pressure once those tokens are released.

Example:
A project has a $100M circulating market cap but a $1B FDV. As locked tokens gradually enter circulation, the market must absorb that supply. Unless demand grows equally, token prices may fall.

Investor Considerations

• Study token emission schedules and vesting timelines.

• Compare circulating supply to total supply.

• Evaluate whether the project’s demand can support future inflation.

Conclusion
FDV is a critical metric for assessing long-term value. A token with a high FDV relative to its current capitalization may face heavy selling pressure. Smart investors always check FDV to understand the real risks behind the numbers.