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Fully Diluted Valuation (FDV) in Crypto Explained: What It Is and Why It Matters
- Fully Diluted Valuation (FDV) in crypto investing reveals the total potential value by considering all tokens in circulation.
- Understanding FDV aids in foreseeing market changes as more tokens become available, affecting the project's value.
- FDV vs. Market Capitalization distinguishes the current value from the future by incorporating total token supply.
- FDV computed as Current Token Price × Total Token Supply estimates potential project value.
- High FDV relative to market cap indicates locked tokens, posing risks of dilution when released.
- FDV's limitations include overlooking market dynamics, early-stage project context, and treating all tokens equally.
- Token unlocks, burns, emissions, and inflationary models influence FDV's accuracy and utility.
- Tracking tools like CoinGecko, Tokenomist.ai offer insights into FDV, tokenomics, and supply dynamics.
- High FDV may suggest future potential but could signal dilution risks if demand fails to match increased supply.
- FDV is essential for long-term assessment, but combining it with other metrics is crucial for balanced investment decisions.
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