Crypto Dictionary

Fully Diluted Market Cap

Fully diluted market cap is a measure of the total market value of a cryptocurrency, including all future minted tokens, calculated using the current price.

Cryptocurrency enthusiasts who have been in the realm long enough must have probably come across the term Market cap. We have a guide on what is market cap. However, a fully diluted market cap is quite different from a market cap.

A fully diluted market cap is also referred to as a fully diluted valuation. It generally denotes the market cap of a project once all the tokens or coins of a particular cryptocurrency have been released.

The metric is an estimated outlook of the project's future market cap. A fully diluted market cap is not a commonly used metric by analysts or investors. However, it can provide some understanding of the cryptocurrency's future.

It is basically calculated by multiplying the current value of a cryptocurrency by its maximum supply. Take, for instance, the example of Bitcoin. BTC is trading at $16,765.90 at press time. The maximum supply of BTC is 21,000,000. The fully diluted market cap of Bitcoin would be $352 billion.

So when does market cap equal fully diluted market cap? When the maximum supply of a cryptocurrency has been released into the market, the fully diluted market cap will be equal to its market cap.

This metric can help identify how the future supply of a particular cryptocurrency into the market will affect it. It will prove useful for long-term investors to analyze a project better. However, the fully diluted market cap doesn't help to forecast future prices.

Key Takeaways

  • The fully diluted market cap (also known as fully diluted valuation) is an estimated outlook of the project's future market cap. 
  • It is calculated by multiplying the current value of a cryptocurrency by its maximum supply. 
  • When the maximum supply of a cryptocurrency has been released into the market, the fully diluted market cap will be equal to its market cap. 

FAQs

Is Fully Diluted Market Cap the same as Total Market Cap?

Fully Diluted Market Cap takes into account any additional coins that may become available as a result of dilution from future events such as token sales and airdrops, whereas Total Market Cap does not.

How can investors use Fully Diluted Market Cap?

Investors can use Fully Diluted Market Cap to make more informed decisions when investing in a cryptocurrency. It takes into account any additional coins that may become available as a result of dilution from future events such as token sales and airdrops. The closer Fully Diluted Market Cap is to the real Market Cap, the more stable given cryptocurrency price will be in the future.

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