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1. What is Circulating Supply?
The circulating supply of a cryptocurrency specifies how many units of that cryptocurrency are circulating in the market at a given time. For example, at the time of writing, approximately 18.98 million BTC, 120 million Ethereum (ETH), and 81 billion Tether (USDT) are in circulation. Note that circulating supply doesn’t refer to all units of that cryptocurrency that you can buy on a crypto exchange—it simply means the cryptocurrency currently existing on the blockchain and freely transferable between wallets. For instance, Satoshi Nakamoto, the creator of Bitcoin, controls billions of dollars worth of Bitcoin but hasn’t moved them for over a decade. However, these Bitcoins are still considered part of Bitcoin's circulating supply. This consideration has led some analysts to disregard one of the most commonly cited metrics for gauging the cryptocurrency economy’s size: market capitalization. A coin’s market cap is a very crude multiplication of all existing coins at that price, even if many of those coins are lost, seized by the FBI, or owned by deceased individuals. An alternative metric called realized market capitalization attempts to address this by only counting coins that have recently been transferred in its calculation.
What is the difference between Maximum Supply, Circulating Supply, and Total Supply?
2. What is Total Supply?
The total supply of a cryptocurrency is the total number of tokens that exist on the blockchain, including those not publicly circulating. When a cryptocurrency project releases a new token or coin, they may create more cryptocurrency than they distribute at that time. For example, coins allocated as staking rewards—coins given to those who lock tokens in a protocol—may technically “exist” on the blockchain but may not be available to earn until certain conditions are met or a set date arrives. This means they are minted but have never touched anyone’s wallet and are not in circulation. These may have been created post-“pre-mining”—when a developer mines a significant amount before launching the blockchain but doesn’t distribute it to anyone—or may be subject to a distribution period. Total supply does not include burned coins, which refers to tokens permanently removed from circulation by sending them to a wallet with no access key.
3. What is Maximum Supply?
The maximum supply of a coin or token refers to the total number of coins that can ever be minted. Bitcoin’s maximum supply is capped at 21 million. Due to a feature built into Bitcoin’s code, once the number of coins in circulation reaches 21 million, no more can be “mined”—created as a reward for discovering new Bitcoin blocks. Some coins don’t have a maximum supply. Ethereum is one such example; there is currently no upper limit on the number of ETH that can exist, though only about 18 million ETH can be minted each year based on the current block discovery time and rewards. The supply of some cryptocurrencies fluctuates, making maximum supply hard to quantify. For example, LUNA is created and burned to keep the price of UST, a dollar-pegged stablecoin issued on the Terra ecosystem, at $1. Additionally, Ethereum now burns a portion of coins paid as transaction fees instead of transferring all to miners following the implementation of EIP-1559 in August 2021.
4. Which Metric is Most Important?
It’s difficult to say whether overall supply, circulating supply, or maximum supply is the most important—each has its specific use. However, knowing the differences can help when exploring the cryptocurrency market and understanding how these metrics may impact a coin’s price.
An important metric is the fully diluted market capitalization—the maximum supply of a token multiplied by its current price. This includes distributed tokens and can provide hints about the amount some market actors, such as early investors or project teams, might sell on the open market once they gain access to the coin.
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