Circulating Supply refers to the total quantity of a specific cryptocurrency that is currently available and actively circulating in the market. This figure excludes coins or tokens that are held by the project’s team, reserved for development, or locked in long-term contracts. In essence, it represents the number of coins or tokens that are accessible to the public for trading and ownership.
Circulating supply is a crucial metric for investors and traders because it directly influences the coin’s market dynamics, pricing, and liquidity. A higher circulating supply generally indicates a more widely distributed cryptocurrency, potentially leading to lower price volatility. Conversely, a lower circulating supply often results in higher demand and can contribute to more substantial price fluctuations.
Understanding the circulating supply of a cryptocurrency is essential for evaluating its market potential and determining its role within the broader ecosystem. This metric is often used in conjunction with other factors like total supply and market capitalization to assess the overall health and attractiveness of a digital asset for investment or trading purposes.