How can I calculate the fully diluted valuation of a cryptocurrency?

Fully diluted valuation, which multiplies a cryptocurrency's maximum supply by its current market price, provides insight into its potential maximum value and long-term investment potential.

Nov 03, 2024 at 07:09 pm

How to Calculate the Fully Diluted Valuation of a Cryptocurrency

1. Understand the Concept of Fully Diluted Valuation:

Fully diluted valuation reflects the total value of a cryptocurrency if all its potential tokens or coins were released into circulation.
This considers the maximum supply, not just the current circulating supply.

2. Identify the Maximum Supply:

Check the cryptocurrency's whitepaper or website for the specified maximum supply.
The maximum supply represents the total number of tokens or coins that can ever be created.

3. Determine Current Market Price:

Obtain the current market price of the cryptocurrency from a reputable cryptocurrency exchange.

4. Calculate Fully Diluted Valuation:

Multiply the maximum supply by the current market price.
Fully Diluted Valuation = Maximum Supply x Current Market Price

Example:

Imagine a cryptocurrency with:

Maximum supply: 1,000,000 tokens
Current market price: $5 per token

Fully Diluted Valuation:

$5 x 1,000,000 = **$5,000,000**

Benefits of Calculating Fully Diluted Valuation:

Provides a potential maximum value of a cryptocurrency.
Helps evaluate the long-term investment potential.
Compares different cryptocurrencies based on their future supply.

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