FDV in cryptocurrencies explained simply: how to evaluate crypto projects

When analyzing crypto projects, investors pay attention to key metrics such as market capitalization, trading volume, on-chain data, and others. One such metric in the cryptocurrency market is FDV.

What is FDV in cryptocurrencies?

FDV, or Fully Diluted Valuation, is the total value of a project's assets assuming that all of them have been fully issued into the market.

Unlike traditional securities such as stocks and bonds, cryptocurrencies may be released to the market only partially. For example, approximately 98% of the maximum possible 21 million bitcoins have already been mined, while some projects have released less than half of their maximum token supply into circulation.

For example, less than one-third of the total supply of the official Trump memecoin, TRUMP, is currently in circulation. As a result, its FDV is significantly higher than its market capitalization because it includes tokens that have not yet been released. At the same time, the asset's price is already under considerable pressure: investors take into account not only the current volatility of the memecoin, but also the risk of a large volume of yet-to-be-released tokens entering the market in the future. Against this backdrop, the value of TRUMP has fallen by nearly 80% over the past year.

As a result, market capitalization does not account for the full issuance of a particular cryptocurrency. This trend has even led to the emergence of a separate term, "low float, high FDV."

At the same time, a high FDV in cryptocurrencies does not automatically mean that a project is overvalued or a poor investment. In some cases, a significant portion of tokens may be locked for extended periods, while the project itself continues to develop and expand its user base. Therefore, FDV should be analyzed together with tokenomics, token unlock schedules, and the project's fundamental indicators.

The partial release of tokens makes it more difficult to assess the future value of a cryptocurrency. As long as not all assets are in circulation, it is harder for investors to determine:

How future token unlocks will affect the price;
Whether demand for the asset will remain after supply increases;
Whether the project will continue to develop technologically and deliver on its stated roadmap;
How the actions of the team, early investors, and large holders will affect the market;
What regulatory changes may impact the project;
How resilient will the price be if market conditions deteriorate;
How the balance between supply and demand will change once new tokens enter circulation.

For these reasons, FDV is one of the key metrics for cryptocurrency investors.

Previously, investors often had to calculate the FDV of cryptocurrencies themselves: separately finding data on the maximum token supply, checking the current market price, and then multiplying these values to understand what the project's valuation could be if all planned tokens were issued.

Today, the FDV metric is typically calculated automatically and displayed on popular analytics platforms, exchanges, and cryptocurrency data aggregators, including CoinMarketCap, CoinGecko, Binance, OKX, and TradingView. Therefore, investors no longer need to calculate FDV manually every time; they simply need to open the page of the desired asset and compare its FDV with its market capitalization to understand how the project's valuation may change.

There are two commonly used interpretations of FDV in cryptocurrencies:

Fully Diluted Valuation
Fully Diluted Value.

There is also a similar term that some community members confuse with FDV — "Fully Diluted Market Cap."

However, professionals generally distinguish between these concepts, since FDV is more commonly applied to project tokens in their early stages, while Fully Diluted Market Capitalization is more often used for cryptocurrencies that are already listed on exchanges and actively traded.

How is FDV calculated in cryptocurrencies?

FDV consists of two metrics:

The current cryptocurrency price;
The asset's maximum supply.

Therefore, a cryptocurrency's FDV represents the value of all existing and potentially issuable tokens, calculated using their current market price. The maximum supply may include the following tokens:

Already in circulation;
Locked (for example, reserved for investors and the project team);
Not yet issued;
Those that may be issued through mining or staking.

Essentially, FDV is simply a project's market capitalization calculated based on all possible tokens, including locked and not-yet-issued ones. In other words, FDV in cryptocurrencies reflects the project's potential market capitalization at the current token price.

At the same time, FDV can only be accurately calculated for cryptocurrencies with a known or predetermined maximum supply. If a project has no upper supply limit, such as Ethereum or Dogecoin, its traditional FDV cannot be determined because the final number of coins that will exist in the future is unknown. In such cases, analytics platforms may use their own calculation methods or may not display the FDV metric at all.

How does FDV differ from market capitalization?

Unlike FDV, market capitalization reflects the value of only the circulating digital assets that have already been released into the market. However, market capitalization does not account for tokens that may be issued in the future.

For example, if a crypto project has 10 million tokens in circulation worth $50 each, while the maximum supply is 100 million tokens, the market capitalization would be $500 million, whereas the cryptocurrency's FDV would be $5 billion — ten times higher.

Market capitalization can change not only due to fluctuations in a cryptocurrency's price but also due to an increase in the number of tokens in circulation. FDV, on the other hand, is calculated based on the maximum token supply and, therefore, assuming the maximum supply remains unchanged, only changes when the asset's price changes.

Despite this, some members of the crypto community refer to FDV as a theoretical market capitalization.

Once the number of circulating tokens reaches the maximum supply, FDV equals market capitalization, and the metric effectively loses its significance.

What is FDV used for in cryptocurrencies?

FDV helps investors:

Better understand the true scale of a project and assess its long-term prospects and risks;
Estimate the inflationary pressure that the release of new tokens may have on their value;
Compare different cryptocurrencies that have varying amounts of assets in circulation;
Evaluate how much a project's current market capitalization may differ from its potential valuation after all planned tokens have been released;
Account in advance for risks associated with future token unlocks and potential increases in selling pressure;
Identify overvalued crypto projects where only a small portion of tokens is circulating while most of the supply has yet to enter the market;
Analyze a project's tokenomics and understand how sustainable the asset's price may be as supply continues to increase.

At the same time, FDV does not by itself indicate when the remaining tokens will enter the market. To assess the actual risk, investors must also study the token unlock schedule. For example, two projects may have the same FDV, but in one case the remaining tokens may be released gradually over ten years, while in the other a significant portion could enter the market within the next few months.

Thus, FDV in cryptocurrencies allows for a fair assessment of projects and helps evaluate the sensitivity of their tokens to future unlocks, especially during declining market conditions.