There are different types of metrics related to cryptocurrencies. One of the key concepts every trader and investor should know is the circulating supply. Read ahead to get to know what it means and where it’s implemented!
What Is A Circulating Supply?
The circulating supply of a crypto asset is the number of tradable tokens in circulation in the market at a specific moment. This metric is often used for calculating the coins’ market capitalization.
What You Need To Know About The Circulating Supply
The circulating supply value fluctuates over time. For instance, some new coins can be created gradually through mining, while the number of centralized tokens can be increased by the developers via instantaneous minting.
The supply figures can also decrease due to deliberate coin burning, or as a result of accidents, such as when users lose access to wallets where the funds are stored or send assets to an irrecoverable address.
It’s critical not to confuse the circulating supply definition with that of the total supply, which refers to the number of coins mined so far minus all the coins that have been knowingly burned. It is also not the same as the maximum supply, which is the hard-coded limit of a cryptocurrency that can never be exceeded by the total and circulating supplies.
Note that there is no reliable data available on how much of the total supply is in active circulation, which means that the circulating supply metric is always an approximation.
For example, there have been over 19 million bitcoins mined since the blockchain’s inception, so nominally the circulating supply of BTC should be around that number. However, it’s estimated that approximately 4 million BTC have been permanently lost, which makes bitcoin’s actual circulating supply closer to 14 million.
