General overview
The circulating supply indicates how many coins/tokens are currently in circulation and publicly tradable. Other important key figures that may be mentioned in connection with the circulating supply are Max Supply and Market Cap. The circulating supply indicates how many coins/tokens are currently in circulation and publicly tradable. Other important key figures that may be mentioned in connection with the circulating supply are Max Supply, Total Supply , and Market Cap. Cryptocurrencies can be created by mining or destroyed by burning. Likewise, the amount can disappear from circulation by losing it to an untraceable address. However, this must not be confused with depositing on a hard wallet or cold wallet, for example.
Use of Max Supply
The Max Supply is used by the investor to calculate the market capitalization. Here the following calculation is made.
Market Cap = Current Price X Circulating Supply
It is also interesting that coins with Proof of Stake are blocked and not available for trading. These blocked coins are then not in circulation or tradable. This means Circulating Supply is not identical to Total Supply. With the Proof of Work mechanism, this is not the case and the Circulating supply is identical to the Total supply. The above formula gives the answer to why the circulating supply is an interesting number. It is necessary to reach the market cap. The market cap is in turn important for investors to determine whether a cryptocurrency or token has the potential to grow. Therefore, it is worthwhile to take a look at this figure for possible investments, even from the perspective of experienced investors.
Put simply:
If the market capitalization is still small and what the project is believed in many investors consider it a good buying opportunity.
