Why Does Total Supply Of Coins Affect Cryptocurrency Price

Why does total supply of coins affect cryptocurrency price

One of the important factors to consider before investing in any cryptocurrency is to find out the coin supply.

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Some cryptos have finite supply, meaning their supply is capped to certain fixed number. Whereas, some cryptos have infinite supply, meaning there is no hard cap set for that particular coin.

Why does total supply of coins affect cryptocurrency price

In either case, it is important to understand the rate of increase over time. In most of the case, the rate of release of the coin is faster in the early years and over time the rate of release diminishes.

Coinmarketcap(dot)com provides different types of supply for different cryptocurrencies. Broadly there are 3 types of supply provided by cryptocurrency listing cites such as coinmarketcap(dot)com.

Circulating supply: Circulating supply is the amount of coin available at the present time and circulating in the market.

Total supply: Total supply is the amount of coin that is already in existence.

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However, not all of the coins may be circulating at the present time. Generally total supply is equal to or greater than the circulating supply.

Maximum supply: Maximum supply is the amount of coin that will ever exist for that particular cryptocurrency. For example, Bitcoins max supply is 21 million BTC.

Don’t be confused with total supply and max supply.

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They are different. If a cryptocurrency has only the circulating supply, and does not have total supply or max supply, that means that cryptocurrency has no max supply limit.

Why does total supply of coins affect cryptocurrency price

If the cryptocurrency has circulating supply and total supply but does not have max supply, that still means no maximum cap on that coin.

For example, BTC, LTC and DASH have circulating supply and max supply information available. These coins have hard limit and after reaching that cap, there will be no more new coins available.

In the case of ethereum, monero etc., they only have circulating supply information available and not the total or the max supply available, because their supply is infinite.

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However, it is important to note that each of these coins have pre-defined rules on how much coins are produced each year, therefore predictable in nature (predictability is key information for decision makers).

In the case of EOS, circulating supply and total supply is available but max supply is not available. This indicates that EOS supply is infinite.

Alt Coins Circulating Supply Matters

Total supply of 1Billion EOS will be available at the end of ICO. After that, the delegates will be rewarded with the new coins for validating transactions.

Why does total supply of coins affect cryptocurrency price

Therefore there is no hard cap for EOS as well.

Hope this information is useful to you.

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