Circulating supply refers to the number of coins or tokens of a cryptocurrency that are currently available and actively circulating in the market. It represents the portion of the total supply that can be bought, sold, or traded by investors at any given time. This metric is commonly used to assess the availability and liquidity of a digital asset.

Circulating supply shows how many coins are available for trading in the market.

It excludes tokens that are locked, reserved, or not yet released, such as those held by project teams or subject to vesting schedules. Circulating supply is an important factor in determining a cryptocurrency’s market capitalization, as it is multiplied by the current price to estimate total market value. A lower circulating supply can sometimes lead to higher price volatility, especially if demand increases quickly. Understanding circulating supply helps investors evaluate scarcity, potential price movements, and the overall structure of a cryptocurrency’s token economy.

Short example:

Suppose a cryptocurrency has a total supply of 10 million coins.

Out of these, only 6 million coins are currently available for trading, while the rest are locked or reserved.

The circulating supply is therefore 6 million coins, which is the number used to calculate the asset’s market capitalization.

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