What Is Circulating Supply of Cryptocurrency?
The circulating supply is an approximation of the number of assets that are circulating in the market and are available to the public. It is a far superior metric when it comes to determining the market capitalization when compared to the total supply. It is important to note that the circulating supply of a specific cryptocurrency can either increase or decrease throughout time.
How Is It Calculated?
If you want to understand how to calculate the circulating supply through one of the most simplistic ways, you can use the following formula:
- Price will be P
- Market Cap will be MC
- Circulating Supply will be CS
- P = MC / CS
So, the price of an asset would be the total amount of money that is invested in it, minus the total amount in circulation.
When we alter either MC or CS, the price will be affected and make the equation correct. So, if token X has a market cap of 1 million USD, and 20 million tokens in circulation, you have p = 1,000,000 / 20,000,000 which is .05
You can get a lot more in-depth if you want to, by analyzing all of the information such as private allocations, initial distribution, locked assets, team-controlled addresses and the addresses that contain portions of the supply allocation for future use, but this is how it is generally calculated.
Where Does the Analytical Data on Cryptocurrency Come From, and How Do You Check It?
If you're interested in where the circulating supply analytical data comes from, there are numerous explorers that provide you with the opportunity to view them.
Some of the most popular ones include:
Why Is Circulating Supply an Important Metric for Cryptocurrency?
The circulating supply essentially enables investors to better understand the relative valuation of different assets, which will, in turn, allow them to make smarter investments based on analytical data.
It is the total circulating supply in existence, excluding the coins which have been verifiably burned, and it is one of the best metrics when it comes to determining the market capitalization.