Probably Lost Supply

Probably Lost Supply Indicator

The Probably Lost Supply indicator estimates the portion of circulating supply that is likely irrecoverable. This includes coins that are inaccessible due to lost private keys, forgotten wallets, or other similar reasons. The metric helps in understanding the true active supply of the cryptocurrency.

Steps to Use the Probably Lost Supply Indicator

1. Understand the Concept:

• Lost Supply: Refers to coins that are no longer accessible or usable by their holders.

• Relevance: Provides insights into the effective circulating supply, influencing scarcity and market dynamics.

2. Interpret the Probably Lost Supply Indicator:

• High Lost Supply: Indicates a significant portion of the total supply is unavailable, increasing the perceived scarcity of the asset.

• Low Lost Supply: Suggests most of the supply remains active and available for use or trading.

• Long-Term Trends: Monitor gradual increases in lost supply as more coins become inaccessible over time.

3. Analyze Historical Patterns:

• Early Market Phases: Lost supply often accumulates during the early adoption stages due to inexperience with wallet management.

• Long-Term Holders: Coins held for extended periods may become classified as “probably lost” due to inactivity.

• Scarcity Dynamics: Increasing lost supply enhances perceived scarcity, potentially supporting higher valuations.

4. Make Decisions:

• During High Lost Supply Periods: Evaluate the impact on effective supply and potential price implications due to increased scarcity.

• During Low Lost Supply Periods: Consider the greater availability of supply for trading and its effect on market liquidity.

• In Long-Term Analysis: Use the metric to refine models of circulating supply and scarcity over time.

Tips:

• Combine with Active Supply Metrics: Use alongside active supply indicators to distinguish between accessible and inaccessible coins.

• Monitor Scarcity Trends: Analyze changes in lost supply to understand its role in influencing price dynamics.

• Evaluate Network Maturity: Higher lost supply percentages may indicate an older, more mature network with legacy losses.

• Use Historical Comparisons: Compare lost supply trends with historical data to identify patterns and their market impacts.

How to Use the Indicator Effectively

• Assess Scarcity: Use lost supply data to evaluate the effective scarcity of the cryptocurrency.

• Model True Circulating Supply: Incorporate lost supply estimates into analyses of the active market supply.

• Support Investment Strategies: Leverage insights from this metric to refine scarcity-driven investment decisions.

Created By: This indicator is a widely recognized tool in blockchain analytics.