Circulating supply is the amount of cryptocurrency tokens or coins that are publicly available and circulating in the market at any given time.
Circulating Supply Meaning
Understanding the concept of circulating supply is vital in the realm of cryptocurrencies. It represents the total number of coins or tokens of a cryptocurrency that are available in the market and can be traded by the public at any given moment.
What is Circulating Supply?
The circulating supply is an indicator of how many units of a cryptocurrency are currently available for trading. It’s a dynamic number — it can increase as new tokens are mined or decrease through mechanisms like coin burns.
- The increase in circulating supply happens when additional tokens are mined or released into the market.
- A decrease occurs during events such as coin burns, where tokens are intentionally destroyed.
For example, Bitcoin (BTC) has a circulating supply of 19.33 million coins out of a maximum of 21 million. This figure will rise until it reaches the capped limit.
The circulating supply is critical for calculating a cryptocurrency’s market capitalization. To find the market cap, multiply the current price of the coin by its circulating supply.
It’s essential to distinguish between circulating supply, total supply, and maximum supply:
- Total Supply: Includes all coins in existence — both in circulation and held in reserve.
- Maximum Supply: The highest number of coins that will ever exist for a cryptocurrency.
Notably, some cryptocurrencies like Bitcoin (BTC), Cardano (ADA), and Ripple (XRP) have a predefined maximum supply, adding a layer of scarcity.