Recently, many people have been asking what FDV means. In fact, this concept is especially important for investing in cryptocurrency projects, but many still don't understand it clearly.

Simply put, FDV (Fully Diluted Valuation) is the total market value assuming all tokens of a project are in circulation. It differs from the current market cap, which only counts the tokens that are tradable now, while FDV includes all tokens that will be released in the future.

An example makes this easier to understand. Bitcoin's current situation illustrates the issue. As of recently, BTC price is around $78.57K, with a circulating market cap of about $1,61.69B, but its FDV is approximately $1,100B. Why is that? Because Bitcoin's total supply is fixed at 21 million coins, and over 78.57k are already in circulation, so the market cap and FDV are almost the same.

Looking at the NEXO project, the situation is different. NEXO is currently priced at $0.91, with a circulating market cap of $908.40M, but because the total supply is 1 billion coins, the FDV is also $908.40M. This indicates that most of NEXO's tokens are already in circulation.

However, if a project's circulating supply is much smaller than the total supply, FDV becomes especially important. For example, XRP, currently priced at $1.40, has a total supply close to 100 billion coins, but only 1.57T are in circulation. This means there are still a large number of tokens to enter the market, which could significantly impact the price.

Many people make the mistake of only looking at the market cap and ignoring FDV. A project might appear to have a low market cap, but a very high FDV, which should raise caution. Because as those locked or undistributed tokens are gradually released into the market, the increased supply could push the price down. Projects often release tokens gradually through vesting, staking, or mining mechanisms, which is why understanding FDV is so critical for investment decisions.

But it's also important to clarify that FDV is just a reference indicator and shouldn't be relied on alone. Because it assumes the token price remains unchanged, but in reality, increasing supply usually puts downward pressure on the price. You also need to consider the project's actual progress, market competition, token issuance schedule, and other factors.

So next time you evaluate a project, remember to compare both market cap and FDV. This way, you can assess the project's true potential more comprehensively, rather than being misled by a low market cap.