Definition ∞ A Bitcoin Supply Squeeze refers to a market condition where the available supply of Bitcoin on exchanges diminishes significantly, while demand remains constant or increases. This situation can lead to sharp price increases due to the scarcity of accessible coins. It signifies that a substantial portion of Bitcoin is being moved into long-term holding or less liquid storage. This dynamic highlights the inelastic nature of Bitcoin’s total supply.
Context ∞ Discussions surrounding a Bitcoin Supply Squeeze often occur after major accumulation periods by institutional investors or during periods of reduced miner selling pressure. The increasing adoption of Bitcoin as a treasury asset by corporations and the rise of exchange-traded products further constrain available supply. Observing on-chain metrics related to exchange balances and long-term holder activity provides crucial context for this market phenomenon.
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