Circulating cryptocurrencies are listed on various exchanges and cryptocurrency trading platforms. Listed cryptocurrencies have specific supplies. The total supply of each cryptocurrency may be different. This total supply is planned with the 'tokenomics' structure and similar details determined by the cryptocurrency developers. At the same time, the circulating supply of each cryptocurrency may have different values. This value can change over time and can be shaped according to the volatility in the market. The number of cryptocurrencies currently available for trading in the cryptocurrency markets may increase or decrease over time. This affects the circulating supply.
How Does Circulating Supply Change?
The circulating supply of any cryptocurrency can change over time. The supply of the cryptocurrency available on the market may decrease or increase. For this reason, the circulating supply cannot be considered fixed data.
Why Does the Circulating Supply of a Cryptocurrency Decrease?
The circulating supply of cryptocurrency can decrease for many reasons. The circulating supply decreases due to actions such as losing access to the cryptocurrency wallet where the asset is stored, intentionally burning the cryptocurrency, or sending it to an unrecoverable address.
Why Does the Circulating Supply of a Cryptocurrency Increase?
The supply of a particular cryptocurrency in circulation may increase in certain circumstances. The circulating supply of a cryptocurrency can be increased gradually until it reaches the maximum planned supply level. This can be done by the developers of the cryptocurrency.
At the same time, cryptocurrency mining also has an impact on the circulating supply. Mining increases the number of cryptocurrencies available for circulation. For instance, the circulating supply of Bitcoin (BTC), the cryptocurrency with the highest market capitalization, is planned to gradually increase until the maximum planned supply is reached, i.e. 21 million BTC are produced.
What Is the Importance of Circulating Supply in the Cryptocurrency World?
Circulating supply is important because it affects the value of cryptocurrencies. The value of a cryptocurrency is determined by what the investor is selling it for and their willingness to pay for it. If the asset has a high supply and low demand, it may lose its price value. If the supply of the asset is low and demand is high, the price of the asset may rise. The circulating supply can be used to give investors interested in trading cryptocurrencies a good idea. Analysts also track the circulating supply of cryptocurrencies and include it in their forecasts or assessments.
Cryptocurrency developers determine the total supply. From this, they plan how to increase or decrease the circulating supply. Circulating supply is different from total supply or maximum supply. Aggregate supply describes the total amount of cryptocurrencies available. The total supply is always greater than the circulating supply. Total supply refers to the best estimate of the maximum amount of cryptocurrencies. The maximum supply also refers to the cryptocurrencies that will be produced and made available in the future. Circulating supply refers only to cryptocurrencies that are circulating in the current cryptocurrency markets.
