Market capitalization is token price multiplied by circulating supply: the dollar value of tokens that are tradeable right now. It moves with both price and new unlocks, so a flat price next to a rising market cap usually means fresh supply is entering circulation rather than real demand.
Market cap tells you what the market has priced in today. It says nothing about how much supply is still coming, so always read it alongside FDV.
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How it works
Because the denominator is circulating supply, market cap changes in two ways: when the price moves, and when scheduled unlocks expand the float. A protocol can show a flat or even declining price while its market cap climbs, simply because more tokens are now circulating.
Anyone tracking price alone is reading half the picture. The other half is the supply side of the same equation.
Why it matters
A $200M market cap sitting under a $1B FDV means the price implies enough growth to absorb the remaining 80% of supply at today's valuation without diluting holders. That gap is not a red flag in isolation, but it is a commitment to fill a pipeline four times the current float.
Two protocols with identical $100M market caps are not equally risky. If one has 80% of tokens circulating and the other 10%, the second carries a $1B FDV and far more unpriced dilution.
Common mistake
Treating a rising market cap as proof of health. When the rise is driven by unlock-fed supply expansion rather than price appreciation, the headline number flatters a weaker underlying condition.
We decompose every market cap move into its price component and its supply component before drawing any conclusion about momentum.
See Tokenomics Audit for how this applies in practice.
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