Ever wondered what Market Capitalization and Fully Diluted Valuation (FDV) actually mean — and how they’re different?
In this post, I’ll break them down in simple terms, with practical examples. Let’s dive in 👇
What is Market Capitalization (Market Cap)?
Market Cap represents the total value of a crypto token that is currently in circulation.
It’s calculated by multiplying the current market price (CMP) of a token by its circulating supply:
> 📌 Market Cap = CMP × Circulating Supply
🔍 Example:
Let’s say the token $AKN is trading at $0.10, and the circulating supply is 5,000,000 tokens.
Then:
> Market Cap = $0.10 × 5,000,000 = $500,000
So, the total value of all tokens currently in circulation is $500K.
To Understand Market Cap, You Need to Know Two Key Terms:
1. Total Supply / Max Supply – The maximum number of tokens that will ever exist.
Example: $AKN has a Max Supply of 10,000,000 tokens.
2. Circulating Supply – The amount of tokens that have been released and are currently in public hands.
Example: Out of the 10 million total supply, only 5 million tokens are circulating.
In some projects (like $NOT, $DOGS, or $ETH), the total supply and circulating supply are the same — meaning all tokens were released at once.
Market Cap Categories (by Size):
We can classify projects based on their market caps:
Category Market Cap Range
Nano Cap < $50 Million
Micro Cap $50M – $500M
Small Cap $500M – $10B
Mid Cap $10B – $50B
Large Cap $50B+
What is Fully Diluted Valuation (FDV)?
FDV shows the potential total market value of a token if all tokens were released into circulation — including those still locked or reserved.
> 📌 FDV = CMP × Total Supply
🔍 Example:
Using the same token $AKN, priced at $0.10, with a total supply of 10,000,000 tokens.
Then:
> FDV = $0.10 × 10,000,000 = $1,000,000
This means the fully diluted market value of the token would be $1M if all tokens were in circulation.
🔍 Quick Summary:
Metric Formula Focuses On
Market Cap CMP × Circulating Supply Tokens in circulation
FDV CMP × Total Supply All possible tokens
💡 Why is the Difference Important?
In many cases, Market Cap < FDV, because not all tokens are released yet. This gives insight into future token unlocks and potential sell pressure.
But in some projects — like $ETH, $NOT, or $DOGS — where all tokens have been distributed, FDV equals Market Cap.
> If Total Supply = Circulating Supply, then FDV = Market Cap.
This usually happens with fair-launch projects or airdrops where there are no locked tokens.
✅ Final Thoughts
Understanding the difference between Market Cap and FDV can help you assess:
A project's true current value
Potential future dilution
Whether a token is undervalued or overhyped
If this post helped you, don’t forget to share so others can learn too!
Thanks for reading
