Market Cap vs. Fully Diluted Valuation: What's the Difference?
Market cap uses circulating supply; fully diluted valuation counts every token. Here's why the gap matters, how low-float launches work, and what to check together.
Market cap is the number most people check first when sizing up a token. But it can hide how many tokens are still waiting to enter the market. Fully diluted valuation fills in that missing part of the picture.
What Market Cap Measures
Market capitalization is the current token price multiplied by the circulating supply, the tokens currently available to trade. It's a quick way to compare the size of different tokens.
What Fully Diluted Valuation Measures
Fully diluted valuation (FDV) is the current price multiplied by the maximum or total supply, including tokens that are locked, unvested, or not yet created. It shows what the token would be "worth" at today's price if every token were already in circulation.
Why the Gap Matters
A token with a $10 million market cap and a $500 million FDV has only a small fraction of its supply circulating. As locked tokens unlock or new ones are issued, supply can grow dramatically, and unless demand grows just as fast, the price tends to fall.
Low Float, High Valuation
Projects sometimes launch with very few tokens circulating and a high FDV. The small supply makes the price easy to push up early, while large future unlocks create ongoing selling pressure. Early buyers may be buying into a token whose largest holders haven't started selling yet.
Why Market Cap Can Be Misleading for Small Tokens
Market cap is calculated from the last trade price, not from how much money actually stands behind the token. A token can show a large market cap while its liquidity pool holds only a tiny amount. A price can even rise with almost no real trading. In that case, the market cap describes a price few holders could actually sell at.
When FDV Is Less Meaningful
For tokens whose supply is already almost fully circulating, market cap and FDV are close, and the difference matters little. For tokens with unlimited minting, FDV may not even be well defined, which is itself worth noting.
What to Check Together
Market cap, FDV, circulating vs. total supply, the unlock schedule, and liquidity depth. Together they show how much of the valuation is real and how much future supply may weigh on the price.
Check a token's liquidity and supply controls, not just its market cap. A big number on a chart doesn't mean the money behind it is real.