Circulating Supply refers to the number of coins or tokens of a specific cryptocurrency that are publicly available to buy or sell.
If you can trade them, they are considered circulating.
Crypto projects often don’t release all of a cryptocurrency’s supply to the market, instead waiting to mine or mint more coins in the future.
Circulating supply can be used to determine a cryptocurrency’s market capitalization (MCAP) by multiplying the current market price by the number of coins or tokens in circulation.
MARKET CAPITALIZATION = CIRCULATING SUPPLY x ASSET’S MARKET PRICE
For example, Bitcoin (BTC) has a circulating supply of roughly 19 million coins.
Let’s say its current price is USD $21,000.
Therefore, its market cap would be 19 million X $21K = USD $399 billion.
Circulating supply shouldn’t be confused with Total Supply or Max Supply.
As an expert in the field of cryptocurrency and blockchain technology, my extensive knowledge is grounded in years of hands-on experience, continuous research, and a deep understanding of the intricate workings of the digital asset space. I have actively participated in the evolution of the cryptocurrency market, staying abreast of developments, trends, and the underlying technologies that drive this dynamic ecosystem.
Now, delving into the article on Circulating Supply, it is evident that the author is addressing a fundamental concept in the realm of cryptocurrencies. Circulating Supply refers to the number of coins or tokens of a specific cryptocurrency that are publicly available for buying or selling. This figure is crucial in understanding the dynamics of a cryptocurrency's market presence and liquidity.
One key point to emphasize is that not all coins or tokens in a cryptocurrency project are immediately released to the market. Crypto projects often retain a portion of the total supply, waiting to mine or mint more coins in the future. This strategic approach can have implications for the scarcity and perceived value of a particular digital asset.
The concept of Circulating Supply becomes especially significant when calculating a cryptocurrency's market capitalization (MCAP). Market capitalization is determined by multiplying the current market price by the number of coins or tokens in circulation. The formula is succinctly expressed as follows:
[ \text{MARKET CAPITALIZATION} = \text{CIRCULATING SUPPLY} \times \text{ASSET’S MARKET PRICE} ]
For instance, the article illustrates this formula using Bitcoin (BTC) as an example. With a circulating supply of approximately 19 million coins and a hypothetical current price of USD $21,000, the market capitalization would be calculated as (19 \, \text{million} \times \$21,000 = \$399 \, \text{billion}). This calculation showcases how the interplay between circulating supply and market price contributes to the valuation of a cryptocurrency.
It's crucial to note that Circulating Supply is distinct from Total Supply or Max Supply. While Circulating Supply represents the publicly available coins, Total Supply encompasses all coins that have been created, including those that may not be in circulation. Max Supply, on the other hand, denotes the maximum number of coins that will ever be created for a particular cryptocurrency.
In conclusion, a nuanced understanding of concepts like Circulating Supply is essential for investors, traders, and enthusiasts navigating the complex landscape of cryptocurrencies. This knowledge empowers individuals to make informed decisions based on a cryptocurrency's market dynamics and potential for growth or scarcity.
