Bitcoin's actual supply is 4 million less? New model shows that Bitcoin's market value is inflated by $37 billion

A new report from crypto financial data provider Coin Metrics suggests that traditional market capitalization and supply estimation models may be inaccurate as they do not give a “true” picture of the amount of Bitcoin (BTC) and major altcoins currently in circulation.

Crypto financial data provider Coin Metrics has developed a method for calculating these numbers called the “free float” model.

The report’s authors took a number of factors into account when calculating the amount, such as discounting tokens held in wallets that have been inactive for five years or more. Tokens that have been destroyed or are “highly likely to be lost” are also crossed out. Free float also discounts tokens tied to “foundations, companies, and founding teams.”

If correct, these calculations would yield some eye-opening results, with BTC’s reported supply actually being 4 million less than what most data trackers report. This would also reduce Bitcoin’s market cap by roughly $37 billion (currently around $168 billion, according to most data trackers).

When calculating the supply of three altcoins, Coin Metrics’ floating supply calculations show that, in fact, the available supply of tokens exceeds the industry’s reported norm. The most notable of the three is chainlink (LINK), whose free float supply figure is 9% higher than other data providers provide. Stablecoin USDC is +6% higher, while Huobi Token (HT) is +3% higher.

Ethereum (ETH)’s circulation seems to be relatively accurate, with a difference of only -2%, while Monero (XMR)’s circulation is almost accurate.

The report’s authors claim that traders can use the model to help them understand “real” market capitalization data — which could help the average person make more informed trading decisions.

Coin Metrics also added that the new model could “improve the construction of indices to better reflect the liquidity conditions of the market and provide greater transparency into the behavior of large (cryptocurrency) interest groups.”