How to Calculate Market Cap and FDV
Market capitalization is generally the product of the unit price and the circulating supply. FDV is calculated based on the assumption of a fully diluted supply.
On this page
- How is the basic calculation done?
- Why can unit price be misleading?
- Does an increase in market cap mean that much money has entered?
- Circulating value vs. fully diluted value
- Why might circulating supply not be exact?
- Does a large market cap mean an easy sale?
- How can you complete your comparison?
- Sources
Crypto market capitalization is the unit price multiplied by the number of coins or tokens in circulation. It is commonly referred to by the term “market cap.” This metric helps compare the size of assets with different supplies. Market cap does not represent the total amount of money invested in a project, the cash in a company’s vault, or the amount for which all tokens could be sold at once.
How is the basic calculation done?
If a token’s price is $4 and its circulating supply is 50 million units, its market cap is $200 million. The result changes when the price fluctuates or the circulating supply increases. It is necessary to use price and supply data from the same point in time for the calculation. If circulating supply estimates differ across different providers, the market cap may appear different even if the price is the same.
When calculating in TL, you can multiply the token’s TL price by the circulating supply. Alternatively, you can convert the market cap from USD using the USD/TRY exchange rate at that same time. If one uses a current rate and the other an old one, the two results will not match. Global market cap and trading volume specifically in Turkey are also different concepts; a TL display does not mean the entire asset is traded in Turkey.
Why can unit price be misleading?
Suppose the price of Token A is $0.01 and its circulating supply is 100 billion. The market cap would be $1 billion. Now, suppose the price of Token B is $100 and its circulating supply is 1 million. Its market cap is $100 million. Even though Token A’s unit price is much lower, the total value in circulation is ten times that of Token B. Therefore, we cannot consider an asset cheap just because it trades for pennies.
The same logic applies to “if it reaches $1” calculations. If an asset with 100 billion tokens in circulation reaches $1, assuming the supply remains unchanged, its market cap would be $100 billion. This calculation alone does not prove whether the target is achievable or not; it simply makes visible what kind of valuation that price target corresponds to.
| Hypothetical Asset | Price | Circulating Supply | Market Cap |
|---|---|---|---|
| A | $0.01 | 100 billion | $1 billion |
| B | $100 | 1 million | $100 million |
Does an increase in market cap mean that much money has entered?
No. The market price is formed based on the marginal amounts traded, and this price is applied to all units in circulation. For example, if the price of 1 million tokens rises from $10 to $11, the market cap increases by $1 million. This increase does not necessarily mean that $1 million in new money has entered the market. How the price changes depends on the transactions in the order book and the available liquidity.
The same applies in the opposite direction. A $1 billion decrease in market cap does not show that exactly $1 billion was withdrawn from the market. Every seller has a buyer; the price changes according to the level at which these exchanges occur. Presenting market cap changes as cash inflows or outflows confuses valuation with capital flow.
Circulating value vs. fully diluted value
Fully Diluted Valuation (FDV) is commonly used to refer to the current price multiplied by the maximum supply or the total supply used as a basis by the provider. It shows the valuation of tokens that are still locked or will be produced in the future at today’s price. This is not a prediction of the actual future market cap; it is unknown how price and supply will change in the future.
For a token with a price of $5, a circulating supply of 20 million, and a maximum supply of 200 million, the circulating market cap is $100 million, while the FDV based on the maximum supply is $1 billion. The tenfold difference highlights that the circulation could expand significantly in the future. When and to whom the tokens will be released should be separately investigated. For an asset without a maximum supply, this same FDV calculation may not be appropriate.
Why might circulating supply not be exact?
Locked team tokens, project treasuries, bridge contracts, and inaccessible addresses can make classification difficult. The fact that there has been no movement in an address for a long time does not definitively show that its keys are lost. Also, just because a token is technically transferable does not necessarily mean a data provider will accept it as being in circulation. Looking at the methodology used explains the reasons for these differences.
Particularly in new projects, supply information reported by the team may be corrected later. In this case, the ranking may change without a change in price. Distinguish whether a sudden increase in market cap on a chart stems from price action or a supply update. When comparing screenshots taken on different dates, looking only at the ranking is not enough.
Does a large market cap mean an easy sale?
Even if the market cap is large, liquidity on a specific exchange or trading pair may be low. The amount you can sell depends on the currently available buy orders and the depth of the pools. The fact that a token has a multi-billion dollar market cap does not mean that multi-million dollar sales can be made without affecting the price. Volume, spread, and depth are distinct metrics.
For example, while the USD market for the same token might be deep, the TL market might be shallower. The value seen on a global price list is not the actual sell offer of your chosen platform. For a large transaction, it is necessary to understand not just the last price, but at what average price the total amount will be executed. This distinction is also important for small investors; in low-volume assets, even small amounts can create a significant price impact.
How can you complete your comparison?
Use market cap as a starting metric and supplement it with the circulation ratio, token unlocks, trading volume, and the token’s utility. A payment network, a stablecoin, and a governance token do not offer the same economic rights. Having the same market cap does not mean they are at the same level of revenue, usage, or risk. Do not apply price-to-earnings multiples from company valuations without understanding whether the token holder has a right to revenue.
A rise in the ranking on a market table is not a quality assessment on its own. Other assets may have fallen, or supply data may have been updated. A healthy reading includes the question “What price and what supply was this number calculated with?” alongside the question “What rank is it?” This way, you can distinguish what the big numbers represent and what they do not.