What Role Does Token Supply Play in the Valuation of Fungible Vs. Non-Fungible Assets?

For fungible tokens, supply is a critical factor, similar to traditional currency or commodities. A high circulating supply or an inflationary model can depress the unit price, while a low, fixed, or deflationary supply can drive up scarcity and value.

For non-fungible tokens, supply is inherently scarce (usually one of one, or a limited collection). The valuation is driven more by subjective factors like historical provenance, artist reputation, utility, and market demand for that specific unique item.