What Is Total Supply?
The total supply refers to the overall quantity of coins or tokens created or mined for a particular cryptocurrency.
It represents the total number of units that can potentially exist within the cryptocurrency’s ecosystem.
It’s important to note that not all coins included in the total supply metric are necessarily available for use.
Some coins may have been burned or permanently removed from circulation, which means they are excluded from the count.
Total supply also considers coins that may be locked or held in reserve.
In contrast, the circulating supply metric calculates the number of coins or tokens currently circulating and available for trading.
It excludes locked coins held by the project team or not yet released.
When calculating the market capitalization of a cryptocurrency, the circulating supply is typically used as it represents the portion of the total supply that is actively traded and available to the market.
The circulating supply is a more relevant metric for determining a cryptocurrency’s value and market dynamics.
Pre-mining and Lockups
Various factors can influence total supply, such as pre-mined coins intentionally kept out of circulation or tokens locked in smart contracts.
The total supply of a cryptocurrency can be an essential consideration for investors, as it can impact future profitability and supply-demand dynamics.
A large gap between circulating and total supply may indicate a potential future supply influx, which could put downward pressure on prices.