Circulating supply refers to the number of cryptocurrency tokens that are currently available to the public and actively circulating in the market. It excludes tokens that are locked, reserved, or not yet released.
Why It Matters
Circulating supply is a critical metric because it directly determines a token's market capitalization (Market Cap = Price × Circulating Supply). Two tokens at the same price can have vastly different market caps depending on their circulating supplies.
Related Metrics
Total Supply: All tokens that currently exist, including locked or reserved tokens.
Max Supply: The maximum number of tokens that will ever exist (e.g., Bitcoin's 21 million cap).
Fully Diluted Valuation (FDV): Price × Max Supply — shows the theoretical maximum market cap.
Why the Difference Matters
A project with a low circulating supply but high max supply may face significant selling pressure as locked tokens are released. Always check the ratio between circulating and max supply, and understand the vesting schedule for locked tokens.