Market cap, short for market capitalization is a misleading metric when valuing cryptocurrencies.

Market cap is borrowed from traditional finance’s equity valuation methods. Cryptocurrencies and tokens are valued using the equation of exchange.

Types of supply

The cryptocurrency space has started to recognize the inadequacy of “market cap” in valuing cryptocurrencies.

Popular metrics now distinguish between issued supply, and total supply at some later date – fully diluted market cap.

This is only a partial solution, since not even all coins which have been issued are still in circulation (e.g. Satoshi’s coins).

Circulating supply in the Eat Sleep Crypto valuation framework refers to only those coins which have moved in a time frame.

The time frame is arbitrary; it’s only important that the other components of the equation of exchange use the same one.

Why circulating supply is best

The most meaningful comparisons can only be made by looking at different sets of coins – i.e. coins with the same Cryptocurrency Valuation Methods; Determining Coin Age at different dates.

Looking at circulating supply allows more useful comparisons of velocity and supply for the same coin over time.