I’m a little bit surprised that people don’t know why both market cap and fully diluted valuation is crucial for your investment plan.
Let’s change that today.
MCAP / FDV can make you or break you, I will teach you why in only 5 minutes:
Let’s cut the bullsh*t.
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Okay, let’s go: 👇
1: Market cap
The total value of the issued coins on the market.
If there’s only 10 million coins and the price is only $1 then the market cap is $10mill.
The issue comes when they have 10 million coins unlocked with 500 million to be unlocked.
That leads us to FDV 👇
2: Fully diluted valuation
The value of the total supply of coins.
With the example above we said the tokens price is $1, the circulating supply is 10 million, the total supply was 500 million, this means:
🔶 MCAP: $10 million
🔶 FDV: $500 million
Why is this important?
3: Case study One
This example is the epitome of why MCAP/FDV is important.
Let’s look at $LDO .
Take a look at the price action below.
At the start of its journey it was able to pump because:
A: The market cap was small
B: It is a good product
Once the supply started to hit the market its market cap continued to grow.
Its price became suppressed.
The winners?
Those who had locked supply to dump onto the market, not the retail investors.
Its price is the same as when it had a low market cap despite it increasing.
4: Understanding unlocks
Just because a coin has a large FDV does not mean that it cannot pump short term.
It matters long term.
You saw the amazing price action at the start of $LDO‘s journey, insane.
Use @Token_Unlocks (𝕏) to see when a token has supply entering the market.
5: Using it to inform your investments
I feel comfortable holding a coin with:
🔶 A: Narrative
🔶 B: Catalysts
🔶 C: Unlocked supply (most of it)
I don’t want to hold a coin long term that I know full well is getting dumped on my head by a bunch of dirty VCs.
Short term maybe.
6: Where can you find this information?
🔶 @coingecko
🔶 @Token_Unlocks
Hope this helps.
End Of Article.
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Purely educational, not financial advice.
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