What is circulating supply, max supply, total supply? The difference among these metrics

The supply of a cryptocurrency is an important factor to compare potentials of coins/tokens and assessing the size of the crypto economy.

In the following article, Ecoinomic.io will explain and distinguish the difference between circulating supply, Max Supply and total supply.

What is circulating supply?

Circulating supply is the number of tokens/coins circulating in the market that investors own and can trade at a given time.

Circulating supply changes frequently, which can increase or decrease over time. Protocols like Bitcoin create and add tokens into circulation through the mining process.

Besides, the process of Burning coins will remove coins/tokens from the market and cause Circulating Supply to decrease, increasing the value and scarcity of coins.

For example: BNB Auto-Burn protocol of Binance exchange will burn BNB every quarter until the total amount of BNB in circulation falls below 100 million.

Circulating supply is an important indicator for comparing the valuations of different tokens/coins and calculating market capitalization. Market capitalization is calculated as the circulating supply multiplied by the price of a crypto asset.

What is total supply?

Total supply is the total number of tokens/coins in existence including both coins/tokens in public circulation and locked-up or reserved tokens for Farming, Staking,…

The Total Supply is calculated as the total number of coins/tokens that have been mined minus the number of coins/tokens that have been burned.

What is max supply?

Max supply is the maximum number of tokens/coins over the life of a cryptocurrency, including those that have been burned, are in circulation and will be mined in the future.

For example, Bitcoin has max supply of 21 million coins and the total supply gets cut in half every four years through Halving Bitcoin.

Difference between circulating supply, max supply and total supply

Circulating supply, max supply and total supply have certain differences. The below table shows these differences.

The platforms allow tracking circulating supply, max supply, total supply

You can track and look up circulating supply, max supply, total supply of coins/tokens at ecoinomic.io or coinmarketcap.com, coingecko.

Besides, Ecoinomic.io is also an information site that provides the latest news about the cryptocurrency market, helping investors to combine indicators, update the market navigation situation to assess price fluctuations.

>>> Related: Top most prestigious coin exchanges in 2022

FAQs about circulating supply, max supply, total supply

• What is 24 hour Volume?

24 hour Volume is the total number of transactions to buy and sell crypto assets within 24 hours. This is an indicator that shows the liquidity of crypto assets to help investors assess the value of assets through buying and selling power in the market.

• Why is circulating supply used to determine market capitalization instead of total supply?

Circulating supply is the better indicator for determining market capitalization. Since the value of a cryptocurrency is not directly affected by the locked, reserved, and unsold tokens/coins on the public market, market capitalization is calculated by circulating supply instead of total supply.

The rise/fall of market cap represents the flow of money in and out of the cryptocurrency industry, helping investors assess the stability of cryptocurrencies over a long period of time. Coins/tokens with a low market cap are often affected by market fluctuations.

Therefore, investors can rely on this indicator to rank and weigh the portfolio effectively, making informed investment decisions.

• What happens if total supply is equal to circulating supply?

If the total supply is equal to the circulating supply, no more coins/tokens will be locked. The allocated coins/tokens will be owned by investors and ready to circulate in the market.

• What happens if total supply is equal to max supply?

When cryptocurrencies reach their max supply, no new coins/tokens will be mined, creating scarcity in the market, leading to deflation or a 0% Inflation rate that causes the token/coin price to rise in the long term.

Therefore, in order to control the value and inflation rate of cryptocurrencies, predetermining max supply along with a stable issuance rate is extremely necessary.

However, Ethereum is a cryptocurrency system that does not have finite supply. As long as each new block is created, the supply of ETH will increase but the issuance of new coins was fixed at 1,600 ETH per day after the Merge.

Conclusion

Circulating supply, max supply, total supply are significant metrics for investors to determine demand, price of coin/token as well as token distribution. Ecoinomic.io hopes that the above article will help you have a good knowledge of these metrics and the differences among them to access the potential of coin/token.