Circulating supply does matter to some extent when I'm considering investing in a project, but it's not the only factor. A fair percentage of the max supply in circulation really depends on the project, its stage of development, and its overall potential. If a project has high supply coin, then likely the value of each coin would be very less. If the supply goes high all of the sudden, this will indeed crash the price of the coin. If a coin has very low supply, it might raise some concerns, because very likely the developers are using the low supply to manipulate the market. The main thins is, you should dig deeper into the project's tokenomics, roadmap, and see how the team plans to distribute the coins in the market. If the project has a killer usecase, I doubt supply would be an issue.
Right, it's also worth paying attention to the distribution of supply among categories of investors. If the developers and main investors hold the bulk of the supply, then such a coin can easily make a dump, especially if the timing of unlocking such coins is not that far from the listing date of that project on the exchange. If most of the coins are blocked, however, it is worth calculating the FDV parameter to understand how much money the project will need to raise when the supply on the market increases.