Circulating Supply

What is Circulating Supply?

Circulating supply is the total number of cryptocurrency tokens that are currently available in the public market. It represents the tokens that are "unlocked" and can be actively traded or used.

How does Circulating Supply work?

1. It is calculated by taking the total supply and subtracting tokens that are locked, in escrow, or otherwise not yet issued.
2. The circulating supply increases as new tokens are minted (e.g., via mining) or as team/investor tokens vest.
3. It decreases when tokens are "burned" or permanently removed from circulation.
4. Market capitalization is calculated by multiplying the current price by the circulating supply.
5. Data aggregators like CoinMarketCap track these changes in real-time.

Why does Circulating Supply matter?

It provides a more accurate measure of a project's current market value than "Total Supply." Understanding the circulating supply helps investors identify potential "dilution" risk from future token unlocks.

Key features of Circulating Supply

• Real-time measure of liquid supply
• Used for market cap calculations
• Increases via mining or vesting
• Decreases via token burning
• Indicator of current market saturation

Examples of Circulating Supply

• Bitcoin having a circulating supply of ~19.7 million out of its 21 million max.
• A project having only 10% of its tokens circulating, signaling high future inflation.
• A token's price dropping after a large unlock increases the circulating supply suddenly.