What Is Circulating Supply?
Circulating supply is the number of tokens that a data provider considers to be available in the market.
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What is circulating supply?
Circulating supply is the amount of a crypto asset considered to be circulating in the market. When calculating market capitalization, this number is usually used: price is multiplied by the circulating supply. However, which tokens are counted as circulating can vary according to the data provider’s methodology.
Locked team allocations, project treasuries, or tokens not yet released to the market are excluded in some calculations. Conversely, not every inactive token is considered out of circulation. It is often not known for certain whether an asset in an address that has not been used for years is lost or being held for the long term.
Difference from total and maximum supply
Total supply can describe the amount of tokens created and not burned. Maximum supply is the upper limit allowed by the protocol or contract; not every asset has such a limit. Circulating supply, on the other hand, focuses on the portion considered accessible in the market today.
For example, a token could have a maximum supply of 1 billion, a total created supply of 600 million, and a circulating supply of 200 million. If the unit price is $2, the circulation-based market cap is $400 million. When calculated using the entire maximum supply at the same price, a different indicator of $2 billion emerges.
How does supply increase affect price interpretation?
If the circulating supply increases without the price changing, the market cap may rise. This does not prove that there is a new capital inflow of the same amount; the quantity side of the product has grown. Conversely, a supply increase while the price is falling can partially offset the drop in market cap.
When evaluating supply data, look for the update date and calculation scope. Especially for new tokens, team reports and on-chain records may look different. The fact that a single large balance address is considered locked or a change in its classification can affect the displayed market cap without any price movement.