Fundamental & Market Analysis · Sizing Up an Asset
Circulating Supply, Total Supply and FDV
What You'll Learn
- The difference between circulating supply and total supply
- What Fully Diluted Valuation (FDV) represents
- Why the gap between market cap and FDV is worth paying attention to
The Big Idea
Let me teach you three more terms: circulating supply, total supply, and FDV. Circulating supply is how many units currently exist and are available. Total supply, sometimes called maximum supply, includes units that may still be issued in the future. FDV, short for Fully Diluted Valuation, shows what an asset's market cap would be if every one of those future units already existed today.
Let's Break It Down
Circulating supply is the number used in the market cap calculation from the last lesson. It reflects units currently in existence and available. Total supply includes units that are scheduled or expected to be issued later, on top of what is currently circulating, similar in spirit to the fixed-supply and halving concepts you learned in Crypto Foundations.
FDV recalculates market cap using total supply instead of circulating supply. In other words, it estimates what the market cap would be if all future issuance had already happened, at today's price. It is a hypothetical figure, not a current one, but it is a useful way to see the full picture of an asset's eventual supply.
I want you to pay close attention to the gap between current market cap and FDV, because it hints at how much future dilution — new supply entering circulation over time — might still be ahead. A very large gap means a significant portion of total supply has not entered circulation yet, which is a meaningfully different situation than an asset where circulating and total supply are already close together.
Real Example
Think about a company that has issued only a portion of its authorized shares, with the rest reserved to be issued later. Its current market value reflects only what is issued so far. But understanding how many additional shares could eventually be issued gives a fuller picture of the company's total scale — the same way FDV does for a crypto asset.
Why It Matters
Comparing market cap and FDV side by side is a quick, useful check on how much of an asset's eventual total supply is still ahead of it. This directly sets up the tokenomics lesson next, which looks more closely at the rules governing exactly how and when that remaining supply gets released.
Common Mistake
Please do not look only at market cap without checking FDV, especially for a newer asset. A large gap between the two can mean substantial future supply is still set to enter circulation, which is meaningful context that market cap alone does not show.
Quick Check
What does Fully Diluted Valuation (FDV) represent?
Key Takeaways
- Circulating supply is currently available units; total supply includes units still to be issued in the future.
- FDV is market cap calculated using total supply instead of circulating supply.
- A large gap between market cap and FDV signals significant future supply that hasn't entered circulation yet.
Finished reading?
Mark this lesson as complete to track your progress.