Supply is how many tokens exist for a given cryptocurrency, and it is usually reported in three different forms that mean three different things.
Circulating supply is the amount of tokens currently in public hands and actively tradeable. This is the number you multiply by the current price to get market cap. It excludes tokens that are technically issued but locked up in vesting schedules, treasury contracts, unclaimed airdrops, or other arrangements that prevent them from being sold. Circulating supply is the number that best reflects “how much of this token is actually sloshing around in the market right now”.
Total supply is the amount of tokens that have been minted, including tokens that are locked but not yet destroyed. Total supply is always greater than or equal to circulating supply, and the gap between them is the “overhang” that will gradually unlock into the market over time. For a token with 100 million total supply and 20 million circulating, there are 80 million tokens that will eventually hit the market as vesting completes.
Maximum supply (also called “max supply” or “fully diluted supply”) is the ceiling — the total amount of tokens that will ever exist. For Bitcoin, max supply is 21 million, hard-coded into the protocol. For Ethereum, there is no max supply; ETH is issued indefinitely, though EIP-1559 burns a portion of transaction fees, so net issuance can be negative during periods of high activity. For most altcoins, max supply is some fixed number defined by the tokenomics, and the timeline to reach that maximum is determined by the emission schedule.
Why the Numbers Matter
The most common mistake retail traders make with supply is anchoring on market cap (circulating × price) while ignoring the fully diluted value (max supply × price). A token launching with 10 million circulating and 1 billion max supply at $1 per token has a circulating market cap of $10 million, which looks cheap and “early”. The fully diluted valuation is $1 billion, which is a much more honest measure of where the price would have to stay for existing holders to break even on average after all the locked tokens unlock.
The “low float, high FDV” pattern is now a recognised anti-pattern, and it has been widely criticised by more skeptical crypto traders. The rough diagnostic: if a token’s circulating supply is less than 20 percent of its max supply, and the unlocks are coming over the next few years, expect sustained selling pressure as insiders dump into the market at prices well above what they paid (since they received their tokens in pre-launch rounds or team allocations). Unless demand grows faster than the supply-side pressure, the price will grind downward over the vesting period.
Ethereum’s supply has been tracked closely since the Merge because it became possible for ETH issuance to go net negative for the first time. Every block, some new ETH is issued as validator rewards, and some ETH is burned via EIP-1559 from the base fees on transactions. When network activity is high, burn exceeds issuance, and total ETH supply shrinks. When activity is low, issuance exceeds burn, and supply grows. This has produced an unusual situation where ETH’s supply schedule is dynamic rather than predetermined, and it is one of the arguments Ethereum proponents make for ETH being “ultrasound money” (a joke reference to Bitcoin’s “sound money” framing, implying that ETH can be deflationary in a way BTC cannot).
Burns and Supply Reductions
Some tokens explicitly reduce their supply through burns — sending tokens to an unspendable address so that they are permanently removed from circulation. BNB has a quarterly burn mechanism that has eliminated a meaningful percentage of the original supply over time. Ethereum’s EIP-1559 burn mechanism has destroyed millions of ETH since its activation in August 2021. Various memecoins and utility tokens do programmatic burns tied to usage or trading volume.
The effect of burns on price depends entirely on whether the burn is paired with real demand. A burn that removes supply while demand stays constant should, in theory, push the price up. A burn that is accompanied by declining demand does not save the price; it just slows the descent slightly. “We burn tokens regularly” is sometimes used as a marketing point by projects whose fundamentals do not otherwise justify the price, and it is usually not as meaningful as the marketing implies — the total value of the tokens being burned is what matters, not the percentage, and small burns at an already-low price do not move the needle.
The Real Question
The question worth asking when you look at a token’s supply figures is: where does the token come from, where does it go, and who benefits from the flow? If a token is being heavily issued to reward holders, that is dilution on the other holders, and the reward yield is coming out of their pocket. If a token is being progressively burned, that is a supply reduction that might (or might not) support the price. If a token has huge insider allocations unlocking on a schedule you can look up, expect those unlocks to produce selling pressure and price them in. Supply dynamics are one of the most important but most often ignored elements of any token’s long-term price behaviour, and five minutes with CoinMarketCap, TokenUnlocks, or a similar tool before buying can save you from a lot of avoidable pain.