Two numbers describe the same token and they often disagree by a factor of five. The gap between market cap vs FDV is the single most misread figure in crypto screens, and it is misread because both numbers are arithmetically correct. They just answer different questions.
Market cap vs FDV comes down to supply. Market cap multiplies today’s price by coins that exist and can trade right now. Fully diluted valuation multiplies the same price by every coin that will ever exist. If those two figures look like a bargain and a bubble side by side, you are looking at one token through two different supply assumptions.
- Market cap counts circulating supply only — the tokens that can be sold today.
- FDV counts total supply at today’s price, including tokens that are locked, unvested or held by a treasury.
- The gap is a schedule, not a mystery: it is unlocked-but-not-circulating supply waiting to become sell pressure.
- Low float with a high FDV is a structural design choice, not fraud — but it changes what “cheap” means.
What market cap counts, and what it leaves out
Market cap is price multiplied by circulating supply. That is the whole formula, and the ambiguity lives entirely in the word “circulating” — a definition that each data provider sets for itself and rarely explains on the page.
Does circulating include tokens unlocked but not yet claimed? Staking rewards sitting in a contract? Team allocations that are legally restricted but technically transferable? Different trackers answer differently, which is why the same token can show two market caps on two sites minutes apart. Neither is lying. They are counting different things.
Why “circulating” is a judgement call
There is no neutral definition. A token held by the issuing foundation is technically in circulation if it can be moved, and technically not if the foundation says it will not sell. One of those is verifiable and the other is a statement of intent.
For a retail reader the practical consequence is simple: when a market cap looks oddly small relative to a project’s apparent size, check what the tracker counts as circulating before drawing any conclusion. The number is only as good as its supply input.
Why FDV exists: total supply at today’s price
FDV prices the whole eventual supply, including coins that do not exist yet in any tradeable form. It answers a different question: if every token were liquid today, what would this network be valued at on the current price?
That is a hypothetical, and it is a useful one. A token with a small float and a large total supply is, in structural terms, a company whose share count will multiply. The current price was set by the small float. The FDV tells you what that price implies for the larger one.
The limit of the calculation
FDV assumes the price survives the supply increase, and it usually does not. You cannot sell a billion tokens at the price that 100 million of them trade at — the same walking-the-book arithmetic that applies to a single order applies to an entire unlock. FDV is a scale reference, not a valuation you can realise.
Market cap vs FDV in practice: the ratio
The most useful output of putting market cap vs FDV side by side is the ratio between them. A market cap of one-fifth of FDV means roughly four-fifths of the eventual supply has not yet reached the market.
| Measure | Supply used | Question it answers | Where it misleads |
|---|---|---|---|
| Market cap | Circulating supply only | What the market pays for sellable tokens today | Understates future supply; supply definitions vary by tracker |
| FDV | Total supply, including locked | What today’s price implies for the full supply | Assumes a price that the unlock itself may not support |
| Market cap ÷ FDV (float ratio) | Derived | How much of the supply story is still ahead | Says nothing about when the rest arrives |
| Unlock schedule | Time-based | When supply actually enters the market | Cliffs can be met early or delayed; not always public |
| Realised volume | Trade data | Whether the market can absorb that supply | Volume can be incentivised and temporary |
A market cap tells you what the market pays for what exists. An FDV tells you what it would pay for what is coming — and the second number is a promise the first one has to keep.
How emissions, cliffs and treasuries close the market cap vs FDV gap
The gap closes through supply entering the market on a schedule: emissions, vesting cliffs and treasury releases. Each has a different texture, and each behaves differently when the price falls.
Emissions
Continuous issuance pays validators, liquidity providers or users on a fixed or decaying schedule. It is the smoothest form of dilution: small daily increments rather than a single event. Because it is predictable, it is often already reflected in price — but it never stops, which is why a token with perpetual emissions needs constant new demand simply to hold its market cap flat.
Vesting cliffs
A cliff releases a large block on one date rather than a trickle. Investor and team allocations commonly unlock this way, and the recipients’ cost basis is usually far below the market price. That does not mean they all sell, but it means the decision to sell is cheap for them and expensive for everyone else. Cliffs are also where the calendar matters most: the same unlock is a non-event in a liquid market and a multi-day slide in a thin one.
Treasury holdings
A foundation treasury is unlocked supply with a discretionary seller attached. It may be sold over the counter, used for incentives, or never sold. The uncertainty is the point: treasury holdings do not appear in market cap, are counted in FDV, and their disposal is often announced after the fact rather than before.
Why low float and high FDV is a design choice
Issuing a small float is a deliberate structural decision, not a hidden trick. It produces a high price per token on limited supply, a large headline FDV, and a supply overhang that resolves over years.
The design has real trade-offs. A small float makes a token easy to move in both directions, which suits early price discovery and punishes late entrants. It also means the market cap you see is being set by a minority of the eventual supply, so the “valuation” is a thin-sample estimate. None of that is scandalous. It is just a different instrument from a fully circulating one, and it should be read differently.
What “cheap” means when float is low
Cheap usually means “small market cap relative to what I think the project could be worth”. With a low float, a small market cap is the expected result of the structure, not evidence of mispricing. The question to ask instead is what the market cap will be after the next two years of unlocks at an unchanged price — and whether you believe demand grows faster than supply.
Run the arithmetic yourself before forming a view.
- Start with total supply of 1,000,000,000 tokens, circulating supply of 120,000,000, and a price of 0.85.
- Market cap = 0.85 × 120,000,000 = 102,000,000.
- FDV = 0.85 × 1,000,000,000 = 850,000,000.
- Float ratio = 102,000,000 ÷ 850,000,000 = 12%. Roughly seven-eighths of the supply is still ahead.
- Suppose 60,000,000 tokens unlock over the next year, taking circulating supply to 180,000,000 — a 50% increase.
- If market cap stayed at 102,000,000, the implied price would be 102,000,000 ÷ 180,000,000 = 0.567, about 33% lower.
That decline requires no one to sell anything beyond the new supply being absorbed. Nothing went wrong; it is dilution doing what dilution does when demand does not expand to meet it. Whether demand expands is the open question, and it is not one this article can answer.
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