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Circulating Supply

Technical Indicators • Market Metrics • Token Valuation

the number of tokens actively available in the open market

Circulating Supply is the total number of tokens or coins currently available for trading, transacting, and holding in the public market — excluding locked, vested, burned, or otherwise restricted tokens. It is the denominator in the most widely used valuation metric in crypto: market capitalization. Market cap equals price multiplied by circulating supply. This means that two tokens with the same price can have wildly different valuations if their circulating supplies differ — and two tokens with the same market cap can have wildly different prices. Understanding circulating supply is not optional. It is the baseline literacy required to evaluate whether a token is undervalued, overvalued, or structurally designed to dilute holders over time. A token trading at $0.50 with 100 billion circulating supply has a $50 billion market cap — the same as a token trading at $500 with 100 million supply. Price alone means nothing without supply context. The most common trap in crypto is buying a low-priced token expecting it to reach another token’s price without understanding the supply math that makes it impossible. Circulating supply also shifts over time. Vesting schedules unlock tokens monthly or quarterly. Staking locks reduce effective circulating supply. Burns permanently remove tokens. Minting events add new supply. Each of these forces changes the supply-side pressure on price — and cycle-aware investors track them as leading indicators, not lagging data points. The protocols that manage circulating supply responsibly — through transparent vesting, meaningful burns, and demand-driven minting — build trust with holders. The protocols that flood the market with unlocks while marketing scarcity destroy it.

Use Case: An investor evaluating FLR checks that its circulating supply is a known percentage of total supply, confirms the remaining vesting schedule and delegation lock-ups, and calculates a realistic market cap target before entering — rather than comparing FLR’s price to HBAR’s price without accounting for the 10x difference in circulating tokens.

Key Concepts:

  • Supply Structure — The total design of how tokens are allocated and released
  • SAFT Agreement — Pre-launch investment contract granting future token delivery to accredited investors
  • Token Supply Models — Inflationary, deflationary, and hybrid supply frameworks
  • Tokenomics — The economic architecture that circulating supply operates within
  • Token Velocity Control — Mechanisms that manage how fast circulating tokens move
  • Token Sinks — Features that remove tokens from circulation permanently or temporarily
  • Token Unlock Structures — Vesting schedules that expand circulating supply over time
  • Token Vesting Models — Linear, cliff, and backloaded designs that control supply release
  • Token Devaluation — Price erosion caused by supply expansion outpacing demand
  • Emission Sustainability — Whether new supply entering circulation is economically justified
  • Staking — Locking tokens that effectively reduces circulating supply pressure
  • Fungibility — Interchangeability of tokens within the circulating pool
  • Open Interest — Derivatives exposure layered on top of circulating supply dynamics

Summary: Circulating supply is the number that makes price meaningful. Without it, valuation is guesswork. With it, every investment decision gains structural clarity — from market cap reality checks to dilution risk assessments to cycle-phase positioning based on upcoming supply events.

Supply Metric Definition Why It Matters
Circulating Supply Tokens currently available in the open market Determines real market cap and price impact
Total Supply All tokens created minus burned tokens Shows future dilution potential
Max Supply Hard cap on tokens that can ever exist Defines the scarcity ceiling
Locked/Vesting Tokens allocated but not yet released Future sell pressure waiting to enter circulation
Staked Supply Tokens locked in staking contracts Reduces effective circulating supply and sell pressure
Burned Supply Tokens permanently destroyed Irreversible reduction — strongest deflationary signal

Circulating Supply Impact Reference

how supply changes affect price, valuation, and holder positioning

Supply Event Effect on Circulating Supply Price Pressure
Vesting Unlock Increases — new tokens enter market Bearish — more supply available to sell
Token Burn Decreases — tokens permanently removed Bullish — scarcity increases at fixed demand
Staking Lock Effectively decreases — tokens removed from trading Bullish — reduces available sell-side liquidity
Unstaking Wave Increases — staked tokens return to market Bearish — sell pressure from freed capital
Exchange Listing Increases accessibility — not supply itself Mixed — demand spike meets new sell access
Airdrop Distribution Increases — new tokens in wallets Bearish short-term — recipients often sell immediately

Supply Pressure Rule: Price moves on the margin between buyers and sellers within the circulating supply. A token can have 10 billion total supply, but if 8 billion is staked or locked, the price is set by the 2 billion actively trading. Track the effective circulating supply — not just the headline number — to understand real price dynamics.

Circulating Supply Valuation Framework

using supply data to evaluate real market positioning

Market Cap Reality Check
Price means nothing in isolation. A $0.03 token with 100 billion circulating supply has a $3 billion market cap. Expecting it to reach $1 requires a $100 billion valuation — larger than most L1s at peak. Always calculate the market cap at your price target before buying. If the math requires a top-10 valuation to hit your number, the number is wrong.
Fully Diluted Valuation (FDV)
FDV multiplies price by max supply — not circulating. A token with 10% circulating and a $1B market cap has a $10B FDV. That means 90% of supply is still coming. If demand doesn’t grow 10x alongside supply, price erodes. Compare circulating market cap to FDV to gauge dilution risk. The wider the gap, the more future sell pressure awaits.
Supply Ratio Analysis
Circulating-to-total ratio reveals how much inflation remains. XRP at 57B circulating of 100B max is 57% released — moderate future dilution from escrow. FLR’s ratio shifts as delegation and staking lock supply. $KAU/$KAG circulating supply tracks 1:1 with physical metal deposited — no hidden dilution, no vesting schedule, no unlock surprises. The cleanest supply model in the ecosystem.
Effective Supply Calculation
Effective circulating supply = circulating minus staked minus locked in DeFi minus dormant wallets. A token with 50B circulating but 30B staked on Cyclo and 10B in LP on SparkDEX has an effective circulating supply of 10B. That is the number setting the price. Track effective supply for positioning accuracy.

Circulating Supply Due Diligence Checklist

Supply Fundamentals
☐ What is the current circulating supply vs total vs max?
☐ What percentage of max supply is already circulating?
☐ Is the circulating number verified on-chain or self-reported?
☐ Does the project update circulating supply data transparently?
☐ Is there a clear dashboard tracking supply metrics?
☐ If you cannot verify the supply — you cannot trust the valuation
Dilution Timeline
☐ When is the next major vesting unlock?
☐ How much supply enters circulation monthly or quarterly?
☐ Are team and investor tokens still locked or already circulating?
☐ Does the emission schedule reduce over time or stay constant?
☐ What is the FDV-to-market-cap ratio?
☐ Every unlock is sell pressure until proven otherwise
Supply Reduction Mechanics
☐ Does the protocol burn tokens from real revenue?
☐ Is staking reducing effective circulating supply meaningfully?
☐ Are LP locks removing tokens from active trading?
☐ Do burn events outpace new emissions in any period?
☐ Is supply trending deflationary or inflationary net of all forces?
☐ Burns from revenue are real — burns from treasury are cosmetic
Positioning Against Supply
☐ Have I calculated market cap at my price target?
☐ Is my target realistic given circulating and max supply?
☐ Am I entering before or after the next major unlock?
☐ Is my preservation exit to $KAG/$KAU sized for dilution risk?
☐ Are gains secured in Ledger before supply events hit?
☐ The supply schedule is the roadmap — read it before you drive

Capital Rotation Map

circulating supply dynamics across cycle phases

Phase Supply Dynamic Strategy
1. BTC Accumulation Circulating supply stable — low velocity Accumulate tokens with high staked-to-circulating ratios — tightest effective supply
2. ETH Rotation Staking locks tighten effective supply ETH staking ratio rising reduces sell-side — position before supply squeeze amplifies price
3. Large Cap Alts Demand outpaces supply expansion FLR, HBAR, XRP — track circulating vs staked ratios via Cyclo and SparkDEX
4. Small/Meme Low-cap tokens with massive unlocks ahead Check FDV-to-market-cap ratio before entry — most small caps are 80%+ unvested
5. Peak Distribution Unlocks accelerate, unstaking begins Exit tokens with upcoming supply expansion — rotate to $KAG/$KAU where supply = physical metal
6. RWA Preservation Only metal-backed supply holds integrity Kinesis supply backed 1:1 — no vesting, no unlocks, no dilution — Ledger secures positions
Supply Is the Story: Every token tells two stories — the one the marketing team writes and the one the circulating supply reveals. The marketing story talks about partnerships, roadmaps, and potential. The supply story talks about how many tokens exist, how many are coming, and who holds the keys to the unlock schedule. The investors who read the supply story first avoid the dilution traps that destroy portfolios in Phase 4 and 5. They enter tokens where staking and burns tighten effective supply. They exit tokens where vesting and emissions flood it. And when the cycle peaks, they park capital in $KAG/$KAU — where circulating supply is not a tokenomics design choice but a physical reality measured in allocated vaults. Secure foundations in Ledger. The supply math never lies — even when the price does.
 
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