An available supply crunch indicates a significant reduction in the quantity of a digital asset readily available for purchase on exchanges. This condition arises when a substantial portion of tokens is removed from liquid circulation through mechanisms like staking, locking in DeFi protocols, or long-term holding by institutions. Such a reduction in tradable assets can intensify buying pressure, leading to rapid price appreciation. It reflects a shift in investor sentiment towards holding rather than selling.
Context
The market often monitors available supply metrics closely, as a sustained crunch can signal impending volatility or a strong bullish sentiment. Debates often address whether a supply reduction is organic or manipulated by large holders. Future developments may involve protocols designed to further incentivize asset locking, potentially exacerbating these supply conditions.
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