What Is Market Cap in Crypto? Circulating vs Fully Diluted
Market cap is a coin's price times its circulating supply. Learn how it differs from fully diluted valuation (FDV), why unlocks matter and how to read both.
Updated
Market cap (market capitalization) in crypto is a coin's current price multiplied by its circulating supply, giving an estimate of the total market value of all coins currently available to trade. It is the most common way to compare the size of different cryptocurrencies. Fully diluted valuation (FDV) is a related figure that uses the total or maximum supply instead, to show what the project would be worth if every future coin already existed.
Key takeaways
- Market cap = price × circulating supply.
- FDV = price × maximum supply (or total supply when there is no maximum).
- A large gap between market cap and FDV means many tokens are still locked and may unlock later.
- Price alone is meaningless for valuation; supply matters just as much.
- Market cap is not money invested and cannot be realized by selling, because selling moves the price.
- Always read market cap alongside trading volume and liquidity.
How market cap is calculated
The formula is simple:
Market cap = current price × circulating supply
Circulating supply is the number of coins that are publicly available and tradable now. It excludes coins that are locked, reserved for a team or treasury, or not yet issued.
For example, assume a coin trades at $4 and has 250 million coins in circulation:
- Market cap = $4 × 250,000,000 = $1,000,000,000 ($1 billion).
Data sites differ in how they count circulating supply, especially for tokens with complex vesting schedules, so the same coin can show slightly different market caps on different sites.
Three supply numbers
| Term | Meaning | Example |
|---|---|---|
| Circulating supply | Coins available on the market now | Coins held by users and trading on exchanges |
| Total supply | Coins that exist now, including locked ones | Circulating plus locked team and treasury tokens |
| Maximum supply | The most coins that can ever exist, if there is a cap | Bitcoin is capped at 21 million |
Some coins, such as Ethereum, have no maximum supply. For those, FDV is usually calculated with total supply.
Market cap vs fully diluted valuation
Fully diluted valuation (FDV) = current price × maximum supply
FDV answers a different question: what would the project be worth at today's price once all coins are released?
Worked example: a newly launched token.
- Price: $2
- Circulating supply: 100 million
- Maximum supply: 1 billion
| Measure | Calculation | Result |
|---|---|---|
| Market cap | $2 × 100,000,000 | $200 million |
| FDV | $2 × 1,000,000,000 | $2 billion |
| Share circulating | 100 million ÷ 1 billion | 10% |
Only 10% of the supply is on the market. The other 900 million tokens are locked for the team, early investors, a foundation or future rewards, and they will enter circulation over time through unlocks.
Now suppose 100 million more tokens unlock and demand stays the same. Circulating supply doubles to 200 million. If the market cap stayed at $200 million, the price would fall to $200,000,000 ÷ 200,000,000 = $1. In reality, prices depend on buyers and sellers, not a formula, but this shows why large upcoming unlocks can weigh on a token's price.
Why price alone misleads
A low price per coin does not mean a coin is cheap, and a high price does not mean it is expensive.
| Coin | Price | Circulating supply | Market cap |
|---|---|---|---|
| Coin A | $0.01 | 100 billion | $1 billion |
| Coin B | $100 | 1 million | $100 million |
Coin A has the lower price but a market cap ten times larger than Coin B. For Coin A to reach $1 per coin, its market cap would need to reach $100 billion.
What market cap does not tell you
- It is not invested capital. Market cap applies the last trade price to every coin. If a small amount of trading sets that price, the market cap can look much larger than the money that actually moved.
- It cannot be cashed out. If holders tried to sell a large share of supply, the price would drop as they sold through the order book. How far it drops depends on liquidity, not market cap.
- Supply data can be wrong. Circulating supply is often self-reported by projects and can include tokens that are effectively illiquid.
- Stablecoin market cap is different. For a stablecoin, market cap roughly equals the number of tokens issued, because the price stays near $1.
Market cap rankings and dominance
Data sites rank coins by market cap, and they add up every coin's market cap to estimate the size of the whole crypto market. A related figure is dominance: one coin's share of that total.
Dominance = coin market cap ÷ total crypto market cap
For example, assume BTC has a market cap of $1.2 trillion and the total crypto market is $2.4 trillion. BTC dominance = $1.2 trillion ÷ $2.4 trillion = 50%. Traders watch dominance to see whether money is concentrating in the largest coins or spreading into smaller ones. Keep in mind that the total includes thousands of small tokens whose supply and price data may be unreliable, so dominance figures from different sites rarely match exactly.
Market cap and trading
For traders, market cap is a rough size filter rather than a signal. Two things matter more for execution:
- Trading volume and depth: a large-cap coin usually has deep order books, so spreads and slippage are small. See What Is Trading Volume?
- Float and unlocks: a low-float, high-FDV token can see sharp moves around unlock dates. On perpetual futures, heavy demand to short or long such tokens can push funding rates to extremes.
How ArbTide helps
Market cap tells you how big a coin is; ArbTide shows where the same coin trades at different prices or funding rates. Check the live funding rates page to see which coins currently carry extreme funding, and the live arbitrage scanner for price gaps net of fees.
Frequently asked questions
- What is market cap in crypto?
- Market capitalization is the current price of a coin multiplied by its circulating supply, the number of coins available on the market. It estimates the total market value of the coins that exist in circulation today.
- What is fully diluted valuation (FDV)?
- Fully diluted valuation is the current price multiplied by the maximum supply, or total supply if there is no maximum. It estimates what the project would be worth at today's price if every coin that will ever exist were already in circulation.
- Why is FDV often much higher than market cap?
- Many tokens launch with only a small share of supply circulating, while the rest is locked for teams, investors or future rewards. As those tokens unlock, circulating supply grows, so FDV can be several times the current market cap.
- Does a low price mean a coin is cheap?
- No. Price alone says nothing about valuation. A coin priced at one cent with 100 billion coins in circulation has a larger market cap than a coin priced at $100 with one million coins.
- Does market cap show how much money is invested in a coin?
- No. Market cap is the last trade price applied to every coin in circulation. It is not the amount of money that flowed in, and selling a large share of supply would move the price well below the current level.