Explanation
A large gap between market cap and FDV means many tokens are still to be released. Those unlocks often weigh on the price.
01
Valuation with every coin
Fully diluted valuation counts every coin that will ever exist, including still-locked ones. For projects with only ten percent circulating, FDV is therefore ten times market cap. That gap tells you how much future supply still has to hit the market.
02
Why it affects your price
Every unlock brings sellers with a much lower cost basis to market. So review the vesting schedule before buying: a large cliff within a few months is a concrete risk, however good the project. A healthy market-cap-to-FDV ratio is typically above one fifth.
Key takeaways
- FDV shows future supply.
- Review the vesting schedule before buying.
- A large gap with market cap = dilution risk.