Learn / Market cap, volume, and supply
Market data
Market cap, volume, and supply
Market cap is price times circulating supply. That sentence is the whole formula. The arguments start when someone changes what counts as circulating, or compares the result to a volume print from a different set of markets.
Market cap and fully diluted value
Circulating market cap uses the coins the vendor believes are in the float. Fully diluted value multiplies the price by the max supply, or by total supply when max supply is missing. FDV answers a hypothetical: what would the network be worth if every coin that can exist already existed, at today’s price.
A low circulating cap next to a high FDV means a lot of supply is not in the float yet. Unlocks can raise circulating supply without any change in demand. Price then has to fall for market cap to stay flat. That is arithmetic, not a forecast.
Volume
24-hour volume is the notional value of trades the vendor counted. It is not a measure of how many unique people traded, and it is not proof the trades were unsolicited. Wash trading inflates the number on venues that do not police it.
A useful habit is the volume-to-market-cap ratio. A small cap with enormous volume is either in a genuine frenzy or the volume is not economic. Neither case is a reason to chase the print. It is a reason to look at the book on a venue you trust.
Three supply numbers
Circulating supply is the float. Total supply is coins that exist, including those locked, vested, or sitting in a treasury, minus coins burned if the vendor’s method burns them. Max supply is the protocol ceiling, when one exists.
Bitcoin’s max supply is 21 million. Many tokens have no max, which is why the max cell on their page is a dash. A dash means “no ceiling in the data,” not “infinite coins were minted today.”
Questions
Why is fully diluted value higher than market cap?
FDV prices the unissued or locked supply at the current market price. Market cap does not.
Does high volume mean a coin is safe?
No. Volume says how much notional traded. It says nothing about solvency of the venue, the quality of the trades, or the future price.