Executive summary: Fully Diluted Market Cap — How Emissions Kill Tokens in a Bear Market
FDV is a metric that gets ignored until the bear market hits. Investors wake up to fantastical valuations and panic sell their coins. In this article, I look at the significance of the fully diluted market cap.
What you will learn:
- What token emissions and fully diluted value are and how to incorporate them in your investment decisions.
- The fully diluted value (or market cap) of a token is the value of all the tokens that will ever be in circulation.
- The three reasons to look at a token's FDV are assessing its fair value, understanding token emission and potential selling pressure, and determining team and market sentiment towards the project.
- When you use FDV for trading, look at a token's initial valuation and how it compares to competitors.
- It's also important to understand where we are in the market cycle and how FUD and narratives influence the token price.