The current circulation of a cryptocurrency refers to the total number of coins in public hands at any given time. Analyzing current circulation provides insight into the token supply dynamics shaping an asset’s valuation and ubiquity.
What is Current Circulation?
Current circulation represents the number of issued coins that are publicly traded or held in user wallets. This excludes coins that have not yet been mined or minted, as well as tokens held by the project itself. Current circulation equates to the total supply minus the founders’ stash and locked or burned tokens.
The current circulation can increase as more coins get released via mining and other issuance schemes. Cryptocurrencies with low current circulation tend to have higher per-coin values compared to widely circulated options, all else equal.
Founder Holdings and Reserve Funds
New projects often retain a portion of the total supply that is not initially put into circulation. These founder holdings or reserve funds are excluded from the circulating supply until actually distributed at later stages.
Analyzing what percentage founders hold can indicate the future inflation rate as those reserves enter circulation. High reserves could suppress prices short-term but support longer-term network growth.
Locked and Burned Tokens
Some additional coins may have been minted but are not actively circulating due to being locked in smart contracts or purposefully burned.
Locked coins usually reflect vesting schedules that restrict sales by insiders. Burned tokens are destroyed entirely and can lower the maximum possible circulation. Subtracting locked and burned tokens provides the most accurate current circulation.
Comparing Market and Circulation Caps
Comparing a cryptocurrency’s current circulation to its overall market capitalization sheds light on the valuation per coin. High market caps relative to circulation point to strong bullish sentiment that may be overextended in the short-term. Low market caps indicate undervaluation or lack of investment interest. Monitoring changes in this relationship helps gauge shifts in demand.
A cryptocurrency’s circulation represents the supply of coins actually accessible globally. Analyzing circulation metrics provides perspective on inflation schedules, founder control, and overall availability. Factoring current circulation against market capitalization assists in determining coin valuations. As crypto fundamentals evolve dynamically, following circulation trends is key to informed investment and analysis.