Market Cap vs Fully Diluted Valuation (FDV)
What is Market Cap?
Market cap is short for market capitalization. It tells us how much a company or token is worth. We find it by multiplying the total number of tokens by the price of each token.
For example, if a token has 1 million tokens and each token costs $2, the market cap is $2 million. Market cap helps investors understand the size of a token in the market.
What is Fully Diluted Valuation (FDV)?
Fully Diluted Valuation, or FDV, is another way to measure value. It shows what the total value of a token could be if all tokens were available. This includes tokens not yet released.
To find FDV, we multiply the total supply of tokens by the current price. For example, if a token has a total supply of 2 million tokens and costs $2, the FDV is $4 million.
Market Cap vs FDV
Market cap and FDV are both important. They help investors make decisions. But they are not the same. Here are some differences:
| Factor | Market Cap | FDV |
|---|---|---|
| Definition | Value of tokens currently available | Value if all tokens are available |
| Calculation | Current price x circulating supply | Current price x total supply |
| Use | Shows current market size | Shows potential future value |
Why Are They Important?
Understanding market cap and FDV helps investors. They can see how a token is doing now and what it could be worth later. This helps them decide if they want to invest.
Key Differences
Here are some key differences between market cap and FDV:
- Market cap shows the current value of available tokens.
- FDV shows the value if all tokens were available.
- Market cap is often lower than FDV.
- Investors look at both to make smart choices.
How to Use Market Cap and FDV
When looking at a token, check both market cap and FDV. If the FDV is much higher than the market cap, it may mean more tokens will come out. This can affect the price.
Investors should also consider the project behind the token. A strong project can help the token grow. Always do research before investing.
Conclusion
Market cap and FDV are important tools for understanding token value. They help investors make informed decisions. Always consider both when looking at tokens.
FAQ
What is market cap in simple terms?
Market cap is the total value of all available tokens in the market.
Why is FDV important?
FDV shows the potential value of a token if all tokens were released.
How can I find the market cap and FDV of a token?
You can find this information on many cryptocurrency websites or apps.
Market cap and FDV help investors understand token value better.
