Circulating supply is a crucial figure frequently discussed in cryptocurrency market analysis. You've likely heard phrases like "Bitcoin's circulating supply" many times. But what does it mean, and how does it differ from a cryptocurrency's total supply?

What is the Circulating Supply?

Circulating supply indicates the total count of coins or tokens currently in circulation and accessible to the public. This figure can change based on factors like the creation of new coins, mining activities, or token burning.

It's primarily utilized to compute market capitalization. You simply multiply the circulating supply by the current market price of the cryptocurrency. Additionally, it helps assess the scarcity of a coin or token, although this doesn't always directly influence its price.

What is the Total Supply?

Total supply represents the total quantity of coins already made available for a specific cryptocurrency. It includes both the circulating supply, which is in public circulation, and any coins or tokens that are currently out of circulation. Coins that have been burned or destroyed are not counted in the total supply.

Since locked-up coins and tokens don't impact the price movement of the cryptocurrency, this number typically isn't factored into any analyses or calculations of the asset's market capitalization.

What is the Maximum Supply?

The maximum supply in the cryptocurrency world refers to the total number of coins that can ever be in circulation. This figure is typically established at the coin's launch and remains fixed thereafter. It indicates how rare a specific cryptocurrency is.

For instance, Bitcoin has a maximum supply of 21 million BTC, signifying that only 21 million BTC will ever exist, with no possibility of creating more coins. This scarcity contributes to Bitcoin's high value. In contrast, Ethereum has a maximum supply of 100 million ETH, implying a relatively lower demand for ETH compared to Bitcoin.

As of the current date, the circulating supply of Bitcoin is approximately 19 million BTC, nearing its maximum supply of 21 million BTC. The total supply remains the same as the maximum supply for Bitcoin.

Considering the Bitcoin halving event in April 2024, it's a significant milestone that reduces the rate at which new Bitcoins are created, further emphasizing its scarcity.

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