Float Analysis

Float analysis focuses on the portion of a token's total supply that is actively available for trading in the public market. This is distinct from the total supply, which may include locked tokens held by founders or early investors.

A low float relative to the total supply can lead to high volatility, as even small buy or sell orders can cause significant price swings. Traders use float analysis to identify potential supply shocks and to gauge the true depth of the market.

Understanding the float is critical for managing risk, especially for projects with large vesting schedules. It provides a more accurate view of the actual liquidity that is driving the price.

Analysts monitor changes in the float as tokens unlock and enter the market. This metric is a key component of understanding the supply-demand balance and predicting future price action.

It helps investors avoid being trapped in assets with low liquidity and high potential for future dilution.