In crypto investing, analyzing fully diluted valuation (FDV) is crucial, particularly when comparing it to market capitalization. A high FDV-to-market cap ratio suggests that a significant number of tokens have yet to enter circulation, potentially diluting the value for existing holders.
Calculating Fully Diluted Value (FDV)
Fully Diluted Value (FDV) is a key measure in cryptocurrency evaluations, showing a project’s future worth and possible token amounts. As the crypto world grows, tools like FDV are integral in assisting both novice and seasoned investors in making informed decisions.
The formula for FDV is as follow:
FDV = Current Token Price (US$) x Maximum Coin Supply
If the Maximum Coin Supply is not available; the Total Coin Supply Can be used.
If both Maximum Coin Supply and Total Coin Supply are not avaible (or infinite), the Fully Diluted Market Cap can be used instead of FDV.
FDV:Market Cap Ratio
Investors have become cautious about projects with low circulation and high FDV, preferring tokens with a 1:1 market cap/FDV ratio.
The Ratio can be calculated by: Dividing FDV by Market Cap.
