What market cap actually measures
Market capitalisation is the last traded price multiplied by the coins in circulation. That is all. It is not the amount of money that has entered the asset, and it is not what the asset could be sold for.
FDV = price × total supply
implied price = target market cap ÷ circulating supply
The distinction matters because a small amount of buying against a thin order book moves the last price, and the last price is then multiplied across every coin in existence. A few hundred thousand dollars of demand can add tens of millions to a headline valuation nobody could ever realise.
A worked example
A coin at $0.85 with 1.4 billion circulating and 2 billion total supply, targeting a $10 billion cap:
| Current market cap | $1.19 billion |
|---|---|
| Fully diluted valuation | $1.70 billion |
| Implied price at target | $7.14 |
| Multiple required | 8.40x |
| Supply still locked | 30.00% |
Note what happens to that 30%. When locked tokens unlock, they join the circulating supply — and at a fixed market cap, more coins in circulation means a lower price per coin.
Why FDV is the number to check
Fully diluted valuation prices every token that will ever exist, including those held by the team, investors and the treasury. A project with a modest market cap and an enormous FDV is telling you that most of the supply has not arrived yet, and that it will arrive whether or not demand grows to meet it.
- A large gap between cap and FDV means sustained sell pressure from unlocks, often for years.
- Check the vesting schedule, not just the ratio. A cliff releasing 20% in one month is very different from a linear release over four years.
- Compare like with like. Ranking a coin by market cap while ignoring its FDV flatters projects with slow emissions and punishes ones that launched fully distributed.
The comparison trap
"If this reached Ethereum's market cap it would be worth $X" is a calculation, not an argument. The number is easy to produce and says nothing about whether the asset does anything that would justify holding that much value. Use the implied price to test plausibility, then check it against a real target with the price target calculator.
Common questions
How is crypto market cap calculated?
Multiply the current price by the circulating supply. Fully diluted valuation uses the total supply that will ever exist instead.
What is the difference between market cap and FDV?
Market cap counts only coins in circulation now. FDV counts every coin that will ever exist, including locked and unvested tokens, so it shows the valuation once everything is released.
Does a high market cap mean a lot of money went in?
No. Market cap is a multiplication, not a measure of inflows. A thin order book can move the last price and therefore the whole valuation with very little capital.
How do I find the price at a target market cap?
Divide the target market cap by the circulating supply. Use total supply instead if you want the price at a fully diluted valuation.
Why does my coin's price fall when new tokens unlock?
At a given market cap, more coins in circulation means less value per coin. Unlocks add supply, and unless demand rises with it the price absorbs the difference.