Circulating Supply Definition
Circulating Supply refers to the number of cryptocurrency coins or tokens that are publicly available and circulating in the market. It excludes coins or tokens that have been locked, reserved, or not released. The circulating supply of a cryptocurrency can have a significant impact on its price and market capitalization.
Circulating Supply Key Points
- Circulating Supply is the total number of coins or tokens that are currently available for transactions in the market.
- It does not include coins or tokens that are locked, reserved, or not yet released.
- The circulating supply is a critical factor in determining a cryptocurrency’s market capitalization and its price.
- Changes in circulating supply can significantly impact the price of a cryptocurrency.
What is Circulating Supply?
Circulating Supply is a term used in the cryptocurrency market to denote the total number of coins or tokens that are currently available for buying, selling, or trading. This figure is a critical factor in determining the market capitalization of a cryptocurrency, which is calculated by multiplying the circulating supply by the current price of each unit.
Why is Circulating Supply important?
The importance of Circulating Supply lies in its direct impact on the price and market capitalization of a cryptocurrency. A high circulating supply can often lead to a lower price per coin or token, assuming demand remains constant. Conversely, a low circulating supply can lead to a higher price per coin or token. Additionally, sudden changes in circulating supply, such as a large number of coins being released into or removed from circulation, can cause significant price volatility.
Where does Circulating Supply come from?
The Circulating Supply of a cryptocurrency comes from the initial coin offering (ICO) or token generation event (TGE), where a predetermined number of coins or tokens are created. After the ICO or TGE, additional coins or tokens may be added to the circulating supply through processes such as mining or staking. Coins or tokens can also be removed from the circulating supply through mechanisms such as burning.
When does Circulating Supply change?
The Circulating Supply of a cryptocurrency can change over time due to several factors. These include new coins or tokens being mined or staked, coins or tokens being burned or lost, and changes in the number of coins or tokens that are locked or reserved.
How is Circulating Supply calculated?
The Circulating Supply of a cryptocurrency is calculated by subtracting the number of coins or tokens that are locked, reserved, or not yet released from the total supply. This figure is then used in conjunction with the current price of each unit to calculate the market capitalization of the cryptocurrency.
