Circulating Supply

The total number of coins available and actively being used in circulation for a specific cryptocurrency.

The circulating supply of the coin is a crucial factor to take into account when you’re conducting your own research on a cryptocurrency to invest in. Since supply and demand are factors in all markets, this will ultimately determine how prices move.

Simply explained, the circulating supply of a cryptocurrency refers to the total quantity of coins that are available for trading on the open market.

Remember that a cryptocurrency’s circulating supply can also change over time, growing or shrinking.

The fact that there are exactly 21 million bitcoins in existence and that number will never change makes bitcoin a suitable illustration. But not all of those coins are accessible at the moment.

Instead, until a total amount of 21 million coins is reached, the supply of Bitcoin will progressively rise. The mining process, which creates new coins every 10 minutes, is responsible for that.

But, there are other cryptocurrencies where coin burn events, which permanently remove coins from the market, also cause their circulating supply to vary.

Remember that the term “circulating supply” only refers to coins that are available to the general public; some coins may be held by the founders or locked away until a specific date or circumstance is satisfied. Premined currencies experience this most frequently (created in full before being released).

So, a cryptocurrency’s market capitalization is determined by its circulating supply. Multiplying the current market price by the quantity of coins in circulation results in a straightforward result. For instance, if there are 1,000,000 coins in circulation and they are valued at $5 apiece, the market capitalization would be $5,000,000.

If you’re trading or conducting research, keep this in mind. Also, always remember to look further to determine whether any coins are locked up and not taken into account, as well as whether or not they will be released.