Circulating Supply
What Is Circulating Supply
Circulating supply refers to the total number of coins or tokens that are currently available and circulating in the market. It differs from max supply which is the maximum number of tokens that can be created. Circulating supply determines the market capitalization of a cryptocurrency, calculated by multiplying the current price by the circulating supply. Market cap is a common metric to rank and compare the size of different cryptocurrencies.
Circulating supply directly impacts the market capitalization of a cryptocurrency. Since market capitalization is the product of the current price and the circulating supply, changes in the circulating supply can affect the market cap. For instance, if the circulating supply increases due to the release of new tokens, the market capitalization will also increase, assuming the price remains constant. Conversely, if the circulating supply decreases due to token burning or other mechanisms, the market cap will decrease if the price remains constant.
What Factors Affect the Circulating Supply of a Cryptocurrency
Circulating supply is influenced by several key factors. Mining and minting add new coins to the supply; for example, Bitcoin is mined through Proof of Work, while others use Proof of Stake. Burning, a mechanism implemented by some cryptocurrencies to permanently remove a portion of the tokens from circulation, decreases the circulating supply of a cryptocurrency.
How to Calculate Circulating Supply
This information is publicly available for many cryptocurrencies and can be verified on blockchain explorers or through official project reports.