Fully Diluted Value (FDV) is a key metric in cryptocurrency that represents the total potential market cap if all tokens were in circulation. Unlike market cap, which only considers available tokens, FDV includes locked and future tokens. Understanding FDV helps investors assess valuation, inflation risks, and project potential. A high FDV compared to market cap can signal future dilution, making it an essential factor in crypto investing.
Key Takeaways
✅ FDV represents the total potential value of a cryptocurrency.
✅ It differs from market cap by including all future tokens.
✅ A high FDV compared to market cap can signal dilution risks.
✅ Investors should consider FDV along with other metrics before investing.
Table of Contents
- What is Fully Diluted Value (FDV)?
- How is Fully Diluted Value Calculated?
- Why FDV Matters in Crypto Investments
- FDV vs. Market Cap: Key Differences
- Risks of Using Fully Diluted Value
- How to Buy Crypto at Gemini
- FAQs
What is Fully Diluted Value (FDV)?
Fully Diluted Value (FDV) is a key metric in cryptocurrency that reflects the total market capitalization if all possible coins or tokens were in circulation. Investors use FDV to understand the full potential valuation of a cryptocurrency. Unlike current market cap, which only accounts for circulating supply, FDV includes locked, vested, or yet-to-be-minted tokens.
How is Fully Diluted Value Calculated?
Calculating FDV is straightforward. The formula is:
FDV = Current Price per Token × Total Maximum Supply
For example, if a cryptocurrency token is priced at $2 and its maximum supply is 1 billion tokens, its FDV would be $2 billion. This metric helps investors gauge whether a cryptocurrency is overvalued or undervalued compared to its current market cap.
Why FDV Matters in Crypto Investments
Understanding FDV helps investors make informed decisions. Here’s why:
- Future Valuation Insight: FDV shows the potential size of a project once all tokens are released.
- Inflation Risks: If many tokens are still locked, their release could dilute the value of existing tokens.
- Comparative Analysis: Investors use FDV to compare different projects within the same sector.
FDV vs. Market Cap: Key Differences
While FDV and market cap both measure value, they serve different purposes:
| Metric | Definition | Key Factor |
|---|---|---|
| Market Cap | Current Price × Circulating Supply | Only considers available tokens |
| FDV | Current Price × Total Supply | Includes all possible tokens |
A large gap between market cap and FDV could indicate upcoming inflation, making it an essential factor for investors to evaluate.
Risks of Using Fully Diluted Value
FDV is a useful metric, but it has limitations:
- Misleading Valuation: If a project has many locked tokens, its FDV might seem inflated.
- Token Release Impact: Large token unlocks can increase supply, reducing price.
- Project Longevity: Not all projects reach full token circulation due to failed development or abandoned roadmaps.
How to Buy Crypto at Gemini
Gemini is a popular exchange where investors can buy cryptocurrencies. Follow these steps:
- Sign Up: Visit Gemini website and create an account.
- Verify Identity: Complete KYC verification by submitting your documents.
- Deposit Funds: Add money via bank transfer or crypto deposit.
- Choose a Cryptocurrency: Search for the token you want to buy.
- Make a Purchase: Select the amount and confirm the transaction.
- Secure Your Holdings: Transfer assets to a personal wallet for safety.
FAQs
What is a good FDV-to-market cap ratio?
A lower FDV-to-market cap ratio suggests lower future inflation. A very high ratio may indicate upcoming dilution.
Can FDV predict a token’s future price?
FDV estimates total valuation but does not guarantee future price movements. Many factors influence price changes.
Why do some tokens have a high FDV but low market cap?
Some projects have large locked token supplies that will be released over time, increasing FDV without affecting market cap immediately.
Does FDV apply to all cryptocurrencies?
Yes, FDV applies to all tokens with a fixed total supply, but its relevance varies depending on the tokenomics of each project.
Should I invest based on FDV alone?
No. FDV is one of many factors. Consider liquidity, market trends, and project fundamentals before investing.
