Circulating Supply

Circulating supply is the number of coins or tokens of a cryptocurrency that are in public hands and able to change owners on the open market. It leaves out units that exist but cannot yet be sold, such as tokens held in a team's locked wallets, investor allocations that have not vested, treasury reserves and coins that have been destroyed. Traders, data sites and analysts use it as the share count behind a token's market value.

The figure sits alongside two related numbers: total supply, which counts every unit created so far, and maximum supply, the most that can ever exist. The gap between them is a central part of a project's tokenomics, because tokens that are not circulating today may be released later. No regulator sets the definition; data aggregators such as CoinMarketCap and CoinGecko publish their own methodologies and work with project teams to verify the numbers.

Think of a theatre that has printed 1,000 tickets for a run of shows. Only 300 are on sale at the box office this week; the rest sit in a drawer for future nights, for the cast's families and for the producers. Anyone judging how easy it is to get a ticket today cares about the 300, not the 1,000.

Circulating supply is the crypto version of the tickets on sale this week. A coin may have billions of units on paper, but if most are held back in locked accounts, the market only trades the slice that has been released. When the drawer opens and more tickets reach the box office, the same demand is spread over more seats.

The three supply figures nest inside one another. Circulating supply is the smallest, total supply is the middle figure and maximum supply, where one exists, is the ceiling:

Circulating supply can be estimated by starting from the total supply and removing what cannot trade:

• $S_{c}$ is the circulating supply.
• $S_{t}$ is the total supply, meaning units created so far minus any that have been verifiably destroyed.
• $L$ is the number of units locked under vesting schedules or smart-contract time locks.
• $R$ is the number held in reserves, treasuries or foundation wallets that are not on the market.

Worked example: a token has a total supply of 1,000 million. Team and investor allocations of 400 million are still locked, and a foundation treasury holds 150 million. The circulating supply is $1{,}000 - 400 - 150 = 450$ million tokens.

Units sent to an unspendable address are no longer counted in either figure; the burned supply entry covers how that is tracked. For Bitcoin (BTC), the maximum is fixed by the protocol at roughly 21 million bitcoins, and circulating supply grows only through new block rewards. Ethereum (ETH) has no fixed maximum, so its circulating supply depends on issuance to validators and the fees burned on each transaction.

Circulating supply is the multiplier in the most quoted crypto metric:

Here $P$ is the price of one unit. Using the example above, at a price of $2 the token's market capitalization is $2 \times 450 = 900$ million dollars. The fully diluted valuation (FDV) multiplies the same price by the maximum supply (or total supply where there is no maximum): $2 \times 1{,}000 = 2{,}000$ million dollars.

The ratio of market cap to FDV shows how much of the eventual supply is already trading. A low ratio, such as 45% in the example, means a large share of tokens is still to be released, which analysts treat as a sign of future selling pressure.

Several mechanisms move the number up or down over time:

• New issuance. Mining and staking rewards add units; the pace is set by each network's token emission schedule and, for Bitcoin, cut by each halving.
• Unlocks. When a vesting cliff passes or a linear schedule releases tokens, a token unlock moves them from the locked column into circulation.
• Burns. Destroying tokens, whether by protocol rule or by a project's buyback, removes them; see burning tokens.
• Airdrops and incentives. Distributions through an airdrop, yield farming or staking programs put tokens in public hands.
• Lost coins. Coins whose keys are lost still count, because no one can prove they are gone. Data sites keep them in the figure even though they will never trade.

Circulating supply is an estimate, not a reading from a single on-chain counter. Projects decide which wallets they call "reserved", and two aggregators can publish different figures for the same token. A team may also report a low circulating figure to keep the market cap modest while the FDV is many times larger, a pattern often criticised in low-float, high-valuation launches.

Investors therefore check the vesting tables in a project's whitepaper, look up locked wallets on a block explorer and read the unlock calendar before relying on the number. A sharp rise in circulating supply without a matching rise in demand tends to pull the price down, the basic supply and demand logic that applies to any asset. Low circulating supply combined with thin liquidity can also make a token easier to move with modest trades, a risk discussed under market manipulation.

• CoinMarketCap: Frequently Asked Questions (supply definitions)
• Bitcoin: A Peer-to-Peer Electronic Cash System