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Why Might a High FDV Compared to a Low Circulating Market Cap Be a Red Flag for Investors?

It signals high future supply inflation and selling pressure from unlocks, indicating the current market cap may be artificially low.
Greeks.Live07.11.25

Why Might a High FDV Compared to a Low Circulating Market Cap Be a Red Flag for Investors?

A high Fully Diluted Valuation (FDV) relative to a low circulating market capitalization indicates that a large number of tokens are scheduled to enter the market soon (due to vesting or unlocks). This creates significant future selling pressure, which can suppress the price.

Investors may perceive the current market cap as artificially low and the future FDV as the 'true' valuation, leading them to be wary of the potential for a large price drop when the tokens unlock. It signals high future supply inflation risk.

Why Is ‘Fully Diluted Valuation’ (FDV) Often Higher than Market Cap?
How Do “Token Unlocks” Create Selling Pressure on a Crypto Asset?
What Is the Difference between ‘Circulating Supply’ and ‘Total Supply’?
Can the Total Market Cap of Stablecoins Be Used as an Indicator of Potential Future Buying Pressure in Crypto Markets?

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