Circulating Supply
Circulating supply is important metric that represents total number of coins or tokens that are available for public trading and use.
A cryptocurrency investor or trader have definitely come across different metrics regarding the supply of a particular asset. These include maximum supply, total supply, and circulating supply.
The amount of a particular cryptocurrency that is currently floating around the market is known as its "circulating supply." For instance, at press time, there were approximately 19.2 million BTC and 122.3 million ETH in circulation.
This metric records the number of tokens or coins accessible for trade rather than the total coin supply. The circulating supply assists in determining the market capitalization of each coin.
Assume you want to purchase ADA coins for staking Cardano. There are 35.2 billion ADA accessible across all CEXs and DEXs. This is the circulating supply of ADA, which is around 75% of its maximum supply, which is 45 billion ADA.
Circulating supply is a metric that increases as well as decreases with time. For instance, the circulating supply of Bitcoin will increase over time as more BTC is mined until it reaches the 21 million maximum supply.
In the other case, when coins like Shiba Inu are burned, the burned coins are removed from their circulating supply. This process permanently removes these coins from circulation.
Similarly locked tokens (e.g. team's vesting supply) are removed from the circulating supply. Nobody can manipulate these tokens as they're locked.
The asset's present value is calculated using the circulating supply. It should be noted, however, that different rules apply to blockchain assets. For example, if a user loses access to the keys to his cryptocurrency wallet, those funds are no longer available for trading by anyone.
Key Takeaways
- Circulating supply is the amount of a cryptocurrency that is currently floating around the market.
- It records the number of tokens or coins accessible for trade rather than the total coin supply.
- Circulating supply increases and decreases with time depending on factors such as mining or burning coins.
- Locked tokens and lost coins are also removed from the circulating supply.
- The asset's present (market cap) value is calculated using the circulating supply.
FAQs
Does the circulating supply affect the price of a cryptocurrency?
Yes, the circulating supply can affect the price of a cryptocurrency. A higher circulating supply can often lead to lower prices.
How does the circulating supply change?
The circulating supply can increase depending on the amount of new coins that are mined and/or released into circulation. It can also decreese as a result of token locking or burning.
What is the difference between market cap and circulating supply?
Circulating supply is the amount of coins that are currently available and circulating in the market. Market cap represents the total value of all these coins in circulation. It literally equals to price * circulating supply.
