What Is Circulating Supply?

Three supply metrics are often confused. Circulating supply is the amount actually available on the market. Total supply covers all units created so far, after subtracting those burned, including locked ones. Maximum supply is the highest amount that can exist under the protocol rules; for Bitcoin, for example, this cap is 21 million. Some cryptocurrencies have no maximum supply.

Circulating supply is used in calculating market capitalization: market cap is price multiplied by circulating supply. Fully diluted valuation (FDV), on the other hand, multiplies the price by the maximum or total supply. A large gap between the two values points to many tokens that will enter the market in the future. For example, for a token whose circulating supply is only 15 percent of its total supply, unlocks of team and investor allocations can create new selling pressure over time.

Data providers may use different methods when calculating circulating supply; whether treasury and team wallets are included can change the figures. For this reason, circulating supply is examined together with the project's token distribution and unlock schedule.