FINANCIAL METRICS IN CRYPTOCURRENCY:

Guides
March 2, 2023

In the cryptocurrency market, several terms are used to describe the size and potential of a particular cryptocurrency. These terms include market capitalization, circulating supply, total supply, and maximum supply.

Market capitalization (Market Cap):

A cryptocurrency’s market capitalization serves as a measurement of its total value. It is calculated by multiplying the price of a single token by the number of tokens in circulation. Market cap is often used as a way to compare the relative size of different cryptocurrencies and is often used as a way to rank cryptocurrencies by size.

Circulating Supply:

Circulating supply refers to the number of tokens that are currently available for trading or use. It represents the amount of tokens that are actually in circulation and is a key factor in determining a cryptocurrency’s market capitalization.

Total Supply:

Total supply refers to the maximum number of tokens that will ever exist for a particular cryptocurrency. It includes both the circulating supply and any tokens that are locked up, reserved, or not yet in circulation.

Maximum Supply:

Maximum supply refers to the highest number of tokens that can be generated or minted for a particular cryptocurrency. It is a hard limit that cannot be exceeded, and once reached, no more tokens can be created.

It’s important to note that the total and maximum supply of a cryptocurrency can have a significant impact on its price and market capitalization, as well as on its potential for long-term growth. For example, a cryptocurrency with a limited total or maximum supply is likely to experience scarcity, which could drive up demand and prices. On the other hand, a cryptocurrency with an unlimited supply may experience increased dilution and decreased demand over time.

Fixed Supply:

Fixed supply is a term used to describe a situation in which the total supply of a particular asset, such as a cryptocurrency or a commodity, is fixed or limited. This means that there is a set amount of the asset that can ever exist, and that no additional units can be created beyond that limit.

Hello, this is Zohaib.

I'm a certified cryptocurrency expert and professional banker with over 17 years of experience in trade finance and corporate banking. With a passion for technology evangelism and a drive to help people understand complex digital products, I have dedicated myself to providing clear and concise explanations of emerging financial technologies such as cryptocurrencies, blockchain, and other innovative financial products. Through this platform, I seek to share my knowledge and insights with others, helping them to navigate the rapidly evolving landscape of digital finance.