- Mar 21, 2013
- 24,784
- 31,550
Here's something I've learned in crypto. Always look for the fully diluted market cap.
This number is often different from the market cap and it can trick you into making wrong assumptions.
Here's an example: https://coinmarketcap.com/currencies/avalanche/
Avalanche market cap is now at $ 2 billion dollars. But if you look closely, the fullly diluted mcap is close to 10 billion. Why? Because lots of AVAX is locked from the initial sale. Avalanche is ranked around #14 in reality, while right now it shows up at #47.
In contrast, Bitcoin's fully diluted market cap is close to its current total value and Ethereum is even closer!
Why is this important?
Because many traders go by the market cap rank and think they can multiply value X times over and become billionaires, when in reality a coin's total valuation may already be close to its theoretical top.
Come September, lots of AVAX will get unlocked and it'll climb up to the top 20 coins. Many other cryptos will also make big moves once their circulating supply increases, without any fundamental changes, just like that. These moves may surprise you if you're not watching the fully diluted market cap.
Wish you all good trades!
This number is often different from the market cap and it can trick you into making wrong assumptions.
Here's an example: https://coinmarketcap.com/currencies/avalanche/
Avalanche market cap is now at $ 2 billion dollars. But if you look closely, the fullly diluted mcap is close to 10 billion. Why? Because lots of AVAX is locked from the initial sale. Avalanche is ranked around #14 in reality, while right now it shows up at #47.
In contrast, Bitcoin's fully diluted market cap is close to its current total value and Ethereum is even closer!
Why is this important?
Because many traders go by the market cap rank and think they can multiply value X times over and become billionaires, when in reality a coin's total valuation may already be close to its theoretical top.
Come September, lots of AVAX will get unlocked and it'll climb up to the top 20 coins. Many other cryptos will also make big moves once their circulating supply increases, without any fundamental changes, just like that. These moves may surprise you if you're not watching the fully diluted market cap.
Wish you all good trades!
