Market cap is not money

The number in large type

Every terminal leads with market capMarket cap (MC)Token price multiplied by the supply in circulation — the headline number every terminal prints in large type.: the last traded price multiplied by the supply in circulation. It is a valuation, not a balance. Nobody has to be holding that much money for the number to appear.

A token at $200,000 means the last person to trade paid a price that, applied to every token at once, comes to $200,000. Only a small part of the supply actually changed hands there.

Market cap answers what the token is worth in theory. It never answers what you can get for yours.

The number that pays you

The money that pays you sits in the Liquidity poolLiquidity poolThe paired reserve — the token on one side, SOL or another quote asset on the other — that a DEX trades against.. LiquidityLiquidityThe money sitting in the pool on the other side of your trade. is the size of that reserve: what somebody is holding on the other side of your sell, right now.

Two tokens can share a market cap and have nothing else in common. One holds $80,000 in the pool and absorbs a large exit. The other holds $4,000, and your sell becomes the candle that ends the chart.

Do the division

Before buying, compare the position you intend to take with the pool, not with the market cap. A sell worth a few percent of the pool leaves near the price on screen. A sell worth a quarter of it does not leave in one piece at all.

Terminals show this directly, as Price impactPrice impactHow far your own order moves the price, decided by order size against pool depth. for a given order size. Enter the amount you would exit with rather than the amount you plan to enter with — the exit is what decides whether the trade was real.

Before the buy

• Pool size, in SOL and in dollars
• Your planned position as a share of that pool
• Price impact quoted for a sell of your full size
• How much liquidity was added or removed in the last hour

FDV and the supply you cannot see

FDVFDVFully diluted valuation: the market cap counted as if every token that can ever exist were already trading. counts every token that can ever exist, including what is locked, vesting or unminted. When it sits far above market cap, the difference is supply that arrives later — and it arrives as selling.

On most launchpad tokens the supply is fixed at creation and the two numbers match. On anything with a team allocation, a vesting schedule or a live Mint authorityMint authorityThe key allowed to create new units of a token. Most launches revoke it at creation., they do not.