Market cap, fully diluted valuation and circulating supply are the three numbers shown next to almost every coin on a price website, and they are often misread. In short: circulating supply is how many coins can be traded today, market cap is the value of those coins, and fully diluted valuation is what the project would be worth if every coin that will ever exist were already in circulation at today’s price.
Circulating supply
Circulating supply is the number of coins that are in public hands and free to trade. It leaves out coins that are locked, such as tokens reserved for a team or investors under a vesting schedule, tokens held in a project treasury, and coins that have been provably destroyed. Data providers estimate this figure from blockchain data and from what projects disclose, which is why two websites can show different numbers for the same coin.
Two related terms appear alongside it. Total supply is every coin created so far, minus any that were burned, whether or not they can be traded. Max supply is the hard limit written into the code, if there is one. Bitcoin’s max supply is 21 million. Ether has no maximum.
Market capitalisation
Market cap = current price × circulating supply
It is the standard way to rank cryptocurrencies by size, and it is far more useful than price alone. A coin priced at $0.50 can be much larger than one priced at $500 if it has far more units in circulation. Market cap is not the amount of money invested in a coin, and it is not the amount holders could take out. It is only the last traded price applied to every circulating unit.
Fully diluted valuation
Fully diluted valuation (FDV) = current price × max supply
Where a coin has no maximum, providers use total supply instead. FDV answers a specific question: if all remaining coins were released tomorrow and the price did not change, what would the network be valued at? The price almost certainly would change, so FDV is not a forecast. It is a way of seeing how much supply is still to come.
A worked example
Take an imaginary token with a price of $2, a circulating supply of 100 million and a max supply of 1 billion.
| Measure | Calculation | Result |
|---|---|---|
| Market cap | $2 × 100 million | $200 million |
| Fully diluted valuation | $2 × 1 billion | $2 billion |
| Share of supply circulating | 100 million ÷ 1 billion | 10% |
Only a tenth of the supply is trading. The other 900 million tokens will reach the market over time through team and investor unlocks, staking rewards or ecosystem grants. Unless demand grows at the same pace, that new supply puts pressure on the price.
Why the gap between market cap and FDV matters
- Small gap. Bitcoin has about 95% of its eventual supply in circulation, so its market cap and FDV are close. Future dilution is limited and predictable.
- Large gap. Many newer tokens launch with 10% to 20% of supply circulating. Traders call this low float, high FDV. The early price is set by a small number of tradable tokens, while the much larger locked portion is scheduled for release.
The schedule is as important as the size of the gap. A project’s documentation normally sets out when locked tokens are released, often with an initial waiting period known as a cliff followed by monthly unlocks. Large unlock dates are public and are watched closely because they add supply on a known day.
Where these numbers mislead
- Thin trading. If a token barely trades, a single small purchase can set a price that produces a large market cap on paper which nobody could realise by selling.
- Self-reported supply. Circulating supply often depends on figures supplied by the project, and errors or optimistic numbers do occur.
- Lost coins. Coins whose keys have been lost still count as circulating. Estimates of permanently lost bitcoin run into the millions.
- No supply cap. For coins with ongoing issuance, FDV based on today’s total supply understates future dilution, while burning mechanisms can work in the opposite direction.
Frequently asked questions
Is a high FDV bad?
Not by itself. It tells you a lot of supply is still to be released. What matters is how quickly it arrives, who receives it and whether demand is likely to grow alongside it.
Why is fully diluted market cap higher than market cap?
Because it multiplies the price by the maximum supply instead of the supply currently trading. The two are equal only when every coin is already in circulation.
Does market cap show how much money is in a coin?
No. It values every circulating coin at the most recent trade. The money that actually flowed in can be far smaller.
Which number should I use to compare coins?
Market cap is the usual basis for ranking. Comparing FDV as well shows which projects have the most supply still locked. We refer to both in our Altcoin News coverage when a token unlock is in the news.
This guide is educational and is not investment advice. Crypto assets are volatile and you can lose money.
