What Is Fully Diluted Market Cap? Fully dilute market cap (or fully dilute valuation, FDV) refers to the market cap of a cryptocurrency when all of its coins have been released. Let's explore more in this article.
What Is Fully Diluted Market Cap?
The fully diluted market cap of a token, which is also known as fully diluted valuation (FDV), is the value of its market cap when all of its tokens have been fully mined or released.
The FDV metric aids investors in determining if the cryptocurrency's current price will be stable going forward or if it is now trading over its ideal value.
How to Use Fully Diluted Market Cap in Crypto Trading?
Let's examine the various outcomes when comparing market cap to fully diluted market cap and what each of these results means for investors. It is preferable if there is little difference between the market cap and the fully diluted market cap.
High difference between market cap and fully diluted market cap
If the difference is high, there will likely be significant inflationary pressure when additional coins are minted, which may mean that the coin is now overvalued.
As an extreme example, if a cryptocurrency's market cap is $15 million at the moment while its FDV is $200 million, this might be a sign that the coin is now overvalued.
Almost equal difference between market cap and fully diluted market cap
A coin is frequently undervalued or fairly valued at the moment if there is little to no difference between its crypto FDV and market cap.
For instance, a cryptocurrency would be considered properly valued if its fully diluted market cap was $10 million and its market cap was $9.5 million.
Low difference between market cap and fully diluted market cap
The coin is now undervalued if the difference between the FDV and the market cap is quite low, suggesting that inflation won't have a significant impact on price or value.
A good example of this would be if the market cap of a cryptocurrency was $90 million and its FDV was $100 million.
This would be a sign that there is room for growth and that the coin is currently undervalued.
Hopefully, reading this article, "What Is Fully Diluted Market Cap? How to Use Fully Diluted Market Cap in Crypto Trading?" can help you to understand it better.
