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Imagine a project whose Fully Diluted Valuation (FDV) exceeds the market cap of global tech giants—despite being only 1–2 years old. This raises critical questions: Who holds this newfound wealth? What was their entry cost? And who’s left to buy at higher prices?
Cryptocurrency trader Cobie demystifies FDV in this streamlined adaptation. For the full context, refer to the original article.
What Is FDV?
- Market Cap: Current price × circulating supply.
- FDV: Current price × total supply (including locked/unreleased tokens).
Data platforms like CoinMarketCap display market caps based on tradable tokens, ignoring those held by teams, investors, or future mining rewards. FDV reveals the project’s theoretical worth if all tokens were liquid—a key metric for price trajectories.
Market Cap vs. FDV: Demand Meets Supply
Cobie analogizes:
- Market Cap = Aggregate demand for the token.
- FDV = Total supply pressure.
While market caps reflect real-time demand shifts, FDV exposes the "hidden" sell-side potential from unlocks. High FDV? Caution advised.
The Pump-and-Dump Playbook
Cobie outlines a hypothetical scam:
- January: Project raises $25M at a $50M valuation (token price: $0.01).
- March: Launches with a 1% airdrop. Demand hits $5M → $5M market cap → $500M FDV (100× multiplier). Price: $0.10 (10x paper gains for insiders).
- May: Hype peaks. Market cap hits $100M → $10B FDV. Price: $2 (200x insider profits).
Outcome: Early holders cash out post-unlock, leaving retail buyers with devalued tokens.
Why Unlocks Can Be Bullish
Counterintuitively, Cobie notes scenarios where unlocks don’t crash prices:
- OTC Trading: Locked tokens trade privately, often at rising valuations.
- "Paper Hands → Diamond Hands": Institutions resell locked tokens to long-term holders before public unlocks.
- Price Alignment: If OTC prices near public market levels, sell pressure diminishes.
Exception: In 2022, 90% of unlocks were bearish due to weak demand.
Bitcoin vs. Altcoins: Supply Schedules
| Asset | Market Cap | FDV | Unlock Timeline |
|----------------|------------|---------|------------------|
| Bitcoin | $970B | $1.07T | 100+ years |
| Typical Alt| $100M | $10B | 2–3 years |
Bitcoin’s slow, predictable emissions contrast with altcoins’ aggressive unlocks—amplifying volatility.
Evaluating FDV: Critical Questions
- Who owns the unlocked wealth? (Teams? VCs?)
- What was their cost basis? (If $0.01 tokens unlock at $2, expect dumps.)
- Who’s left to buy? (Retail often enters late.)
Cobie’s warning: Sky-high FDVs for nascent projects often precede collapses.
FAQs
Q: How does FDV affect token price?
A: High FDV = future sell pressure. Price may drop as locked tokens flood the market.
Q: Can FDV be manipulated?
A: Yes. Low-float projects inflate FDV artificially, luring unsuspecting buyers.
Q: Why do some tokens rise post-unlock?
A: If demand outstrips new supply (e.g., institutional accumulation), prices climb.
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Adapted from Cobie’s original analysis. Always DYOR (Do Your Own Research).