Market cap vs FDV
Market cap and fully diluted valuation answer different questions, and on a new token both can be wrong in the same direction: too optimistic.
The definitions
Market cap is price multiplied by circulating supply, the tokens considered available now. Fully diluted valuation is price multiplied by total supply, including everything locked, vesting or reserved. If a project has released a tenth of its supply, FDV is ten times market cap at the same price.
Why the gap matters
Tokens that are locked today do not stay locked. When a vesting cliff passes, supply arrives on a market that has been pricing scarcity. FDV tells you what the market is implicitly valuing the whole project at, which is the more honest comparison between two tokens with different unlock schedules.
Both numbers assume you can sell
Here is the part that catches people. Both figures multiply by a price that came from the last trade against a liquidity pool. If that pool holds a few thousand dollars, the market cap is a number describing a sale that could never happen. You cannot sell the whole supply at the last price, and often cannot sell even a modest position without moving the price a long way.
Read market cap alongside liquidity depth, never on its own. A $50M market cap on $20,000 of liquidity is not a $50M asset.
Circulating supply is a claim, not a fact
Nothing enforces how circulating supply is reported. Tokens held by the team in an ordinary wallet may or may not be excluded depending on who compiled the figure. When the difference between the two numbers matters to your decision, look at the actual holder distribution on-chain rather than trusting a label.
A practical way to use them
- Compare tokens on FDV, so unlock schedules do not flatter one of them.
- Sanity-check both against liquidity depth.
- Check holder concentration to see how much of that supply can hit the market at once.
Common questions
- What is the difference between market cap and FDV?
- Market cap uses circulating supply; fully diluted valuation uses total supply including locked and unvested tokens. FDV is higher whenever supply is still being released.
- Which is more important for meme coins?
- FDV is usually the fairer comparison because it accounts for supply still to arrive, but both should be read against liquidity depth, which determines what you could actually realise.
- Can market cap be misleading?
- Yes. It multiplies the last traded price by supply, so a token with very thin liquidity can display a large market cap that no seller could ever realise.
Keep reading
Nothing here is financial advice. Meme coins are high risk and most lose value. Read the full risk disclosure before trading.