Understanding Low Circulation Cryptocurrencies
Low-circulation cryptocurrencies make up a significant portion of the market. Among the top 300 cryptocurrencies by market capitalization, approximately 21.3% have a low circulation supply. This means that for every five high-market-cap cryptocurrencies, one has a majority of its tokens still locked or not yet released, resulting in a market cap to fully diluted valuation (FDV) ratio below 0.5.
These tokens are often newer entrants to the market. Out of the 64 low-circulation, high-market-cap cryptocurrencies, 54 were launched in the past four years—12 in 2021, 13 in 2022, 17 in 2023, and 12 so far in 2024. As more projects issue tokens, the potential supply overhang from future token unlocks is expected to continue exerting pressure on the cryptocurrency market.
Four Notable Low Circulation Tokens
Among the top cryptocurrencies, four stand out for their exceptionally low circulation supplies:
- Worldcoin (WLD): With a market cap to FDV ratio of just 0.02, Worldcoin has the lowest circulation in this group. Its token distribution is heavily weighted toward future releases.
- Cheelee (CHEEL): This token has a ratio of 0.06, indicating that only a small fraction of its total supply is currently available on the market.
- Starknet (STRK): Starknet follows with a ratio of 0.07, meaning its circulating supply is minimal compared to its potential future supply.
- Saga (SAGA): Saga rounds out the list with a ratio of 0.09. All four of these projects were launched in either 2023 or 2024.
Investors should be aware that these low ratios suggest a significant portion of the token supply is yet to be unlocked, which could impact future price action due to inflationary pressures. To better understand the mechanics of tokenomics and valuation, explore more strategies for evaluating digital assets.
The Rarity of Fully Diluted Cryptocurrencies
In stark contrast to low-circulation tokens, a much smaller percentage of the market is fully diluted. Of the top 300 cryptocurrencies, only 74 have a market cap to FDV ratio of 1. This means a mere 24.7% of major cryptocurrencies have their entire token supply issued and circulating, with no further unlocks scheduled.
These fully diluted assets tend to be older. While 28 were launched in the last four years, the majority—46 of the 74—were released between 2014 and 2020. This highlights a market trend where newer projects often employ long-term token lockups and vesting schedules for investors and team members.
An interesting subset of fully diluted tokens is memecoins. Fourteen of the 74 fully diluted cryptocurrencies are memecoins. Furthermore, most fully diluted tokens launched in 2023 and 2024 also fall into this category, such as Pepe (PEPE) and dogwifhat (WIF). This reflects the persistent narrative and cyclical nature of memecoin mania within the broader crypto ecosystem.
The Majority: High Circulation Cryptocurrencies
The bulk of the market falls into the high circulation category. There are 162 high-circulation cryptocurrencies among the top 300, accounting for 54.0% of major digital assets. These are projects that have unlocked over half of their total token supply.
Within this group, a significant portion is nearly fully diluted. Specifically, 28.7% of top cryptocurrencies have a market cap to FDV ratio of 0.80 or higher. This segment is predominantly composed of older, more established projects like:
- Maker (MKR): Ratio of 0.95
- Aave (AAVE): Ratio of 0.93
- Near Protocol (NEAR): Ratio of 0.90
Overall, the average market cap to FDV ratio for the top 300 cryptocurrencies is 0.73, indicating that while most projects have released a majority of their tokens, very few are completely free from future supply inflation.
Market Share Distribution
As of 2024, the market share percentage by category for the top 300 cryptocurrencies is a key metric for investors. The landscape is divided between:
- Fully Diluted Cryptocurrencies: 24.7%
- High Circulation Cryptocurrencies: 54.0%
- Low Circulation Cryptocurrencies: 21.3%
This distribution shows that high-circulation assets command the largest share of the market among top tokens, while low-circulation tokens represent a substantial and growing minority. For a deeper analysis of market trends and tokenomics, view real-time tools that track these metrics.
Research Methodology and Definitions
This analysis utilizes data from CoinGecko for the top 300 cryptocurrencies by market capitalization as of May 8, 2024. Stablecoins and wrapped assets were excluded from the study. For cryptocurrencies that do not have a maximum supply, the fully diluted valuation was considered to be the same as the market cap.
For the purpose of this study, specific definitions were applied:
- Low Circulation Cryptocurrency: Defined as having a market cap to FDV ratio between 0 and 0.49.
- High Circulation Cryptocurrency: Defined as having a ratio between 0.50 and 0.99.
- Fully Diluted Cryptocurrency: Only those with a ratio of exactly 1 were classified as fully diluted.
Frequently Asked Questions
What does "fully diluted" mean for a cryptocurrency?
A fully diluted cryptocurrency means that all of its tokens have already been issued and are circulating on the market. There are no tokens held in reserve, locked, or scheduled to be unlocked in the future. This provides a clear picture of the total supply and its current market valuation.
Why should I care about a token's circulation supply?
The circulation supply directly impacts a token's price and potential for inflation. A low circulation supply with a high FDV means a large amount of tokens could be released onto the market later, potentially diluting the value of existing tokens. Understanding this ratio helps assess investment risk.
Are all new cryptocurrencies low circulation?
Not all, but a significant majority are. Our study found that 54 out of 64 low-circulation, high-market-cap tokens were launched in the past four years. New projects commonly use vesting periods to incentivize long-term holding among team members and early investors.
What is the difference between market cap and fully diluted valuation (FDV)?
Market capitalization is calculated using the current price of a token multiplied by its circulating supply. Fully diluted valuation (FDV) is calculated using the current price multiplied by the maximum total supply that will ever exist. The ratio between these two figures shows how much of the supply is already in the market.
Can memecoins be fully diluted?
Yes, many are. Memecoins like Pepe (PEPE) and dogwifhat (WIF) often launch with their entire supply available from the start, resulting in a market cap to FDV ratio of 1. This is different from utility or governance tokens, which typically have structured unlock schedules.
Where can I find a token's circulation supply and FDV?
Most major cryptocurrency data aggregators like CoinGecko and CoinMarketCap list both the circulating supply and the total or max supply for each token. This allows you to easily calculate the market cap to FDV ratio yourself.
This research is for illustrative and informational purposes only and does not constitute financial advice. Always conduct your own research and exercise caution before investing funds into any cryptocurrency or financial asset.