In the world of cryptocurrency, there are a lot of things to wrap your head around. One important concept is circulating supply. This is the number of coins or tokens that are currently available for trade.
It’s a key metric because it helps investors understand how much of a given cryptocurrency is actually in circulation. In this blog post, we’re going to explain everything you need to know about calculating circulating supply.
We’ll also touch on some related concepts, such as total supply and maximum supply. By the end, you’ll have a good grasp on this crucial topic.
What is Circulating Supply?
When determining the circulating supply for a cryptocurrency, it is important to consider all of the units that are in circulation. This includes both public exchanges and private businesses and individuals holding them. A cryptocurrency’s blockchain shows its total supply, but its circulating supply is much smaller.
To calculate the circulating supply, you will need to:
- Determine the total supply of the cryptocurrency. This can be found on its blockchain.
- Subtract any units that are not being traded or held by private individuals or businesses. This includes any units that have been lost, destroyed or are otherwise not in circulation.
- Add any units that have been recently mined but have not yet been traded or released into circulation.
Units are constantly added to the circulating supply and removed from circulation as new ones are mined. As major investors and institutions tend to stay away from public exchanges, the circulating supply does not include any units held by them.
How to Calculate Circulating Supply?
To calculate the circulating supply, we need to first determine the total number of coins in existence. This can be done by looking at the blockchain explorer for the relevant cryptocurrency. Once we have the total number of coins, we need to subtract any coins that are held in wallets that are not intended to ever be traded or sold (this includes “burned” coins).
The remaining amount is the circulating supply.
It’s important to note that some cryptocurrencies have a max supply, meaning that there will never be more than a certain number of coins created. In these cases, the circulating supply will eventually equal the max supply and no further calculations will be necessary.
What is the Difference Between Circulating Supply and Total Supply?
When it comes to cryptocurrency, there is a lot of talk about circulating supply and total supply. So, what exactly is the difference between the two?
Circulating supply refers to the number of coins or tokens that are currently in circulation. This includes all coins that are being traded on exchanges, as well as those that are being held by individuals and not being traded. Total supply, on the other hand, is the total number of coins or tokens that will ever be in existence. This includes all coins that have been mined or created, as well as any that have been burned or destroyed.
So, why is it important to know the difference between these two terms? Well, for one thing, it can help you better understand how a particular cryptocurrency is being used and traded. For example, if a coin has a high circulating supply but a low total supply, then this could mean that there is high demand for the coin but not enough available to meet that demand.
This could lead to price increases. Alternatively, if a coin has a low circulating supply but a high total supply, then it is implying that there is not much demand for the coin and more mining or creation is unnecessary.
There are a few different ways to calculate circulating supply. The most common method is to take the total supply and subtract the amount that is locked up in wallets that cannot be traded or sold.
Another way to calculate the circulating supply is to take the total supply and divide it by the number of active addresses on the network. This gives
you a more accurate picture of how much of the total supply is actually being used and traded.
Thirdly, we calculate circulating supply by subtracting the amount of supply taken out of circulation because of burning, destruction, or other reasons. As a result, you’ll get an accurate picture of the current supply.
The circulating supply of coins will change over time, based on the creation and destruction of new coins.
There are three different ways to calculate a project’s circulating supply. The most common way is to subtract the tokens that are locked away in various forms – such as team wallets, private investors, or smart contracts – from the total supply. Alternatively, you can look at the project’s Block Explorer and tally up all the unspent outputs from the genesis block to the current block. Finally, you can include any coins that may be locked in staking or master node rewards if they exist.
The circulating supply is one of the most important factors in a project’s price discovery as it represents the maximum amount of tokens that can enter the market at any given time. A higher circulating supply generally leads to a lower price per token as there is greater liquidity and more competition for buyers. Similarly, a lower circulating supply can lead to a higher price if there is high demand but few tokens available on exchanges.
It’s important to note that some projects have a large percentage of their total supply locked up and unavailable for trading. This can artificially inflate or deflate the price depending on how much new liquidity enters the market and whether buyers or sellers are more aggressive.
The circulating supply of a cryptocurrency is the number of units that are currently available in the market. Note that this number does not include units locked up in wallets or smart contracts. A cryptocurrency’s maximum supply is how many units will ever be available. This number is often hardcoded into the blockchain and can be different from the actual circulating supply. For example, Bitcoin has a maximum supply of 21 million BTC, but its circulating supply is only 18 million BTC.
How to Calculate Market Cap?
There are a few things to keep in mind when looking at market cap. As a first step, keep in mind that a coin’s market cap does not necessarily equate to its value. You may not see an accurate market cap when looking at a coin or token if its price changes rapidly.
The total supply of a cryptocurrency is multiplied by its price to determine its market cap. The market cap of Bitcoin would be $1 billion if there were 100,000 Bitcoins in circulation. Because there are often multiple prices for one coin, calculating the market cap for cryptocurrency is a little more complicated.
Currently, one Bitcoin is worth $$20,423.37 on Coinbase, and $20,412.76 on Binance. This is why people typically use CoinMarketCap to find out a coin’s market cap. CoinMarketCap takes all of the different prices for a coin into account and then calculates the average price. So, at the time of writing this, the market cap for Bitcoin on CoinMarketCap is $391,229,226,187.
Now that you know how to calculate circulating supply, you can use this information to make better-informed investment decisions. Before investing, be sure to research a coin’s true value, as its market capitalization may not always be accurate. Thanks for reading!