Definition ∞ A Bitcoin supply standoff describes a market condition where a significant portion of available Bitcoin is held by long-term investors, creating a scarcity of sellable coins. This situation reduces market liquidity, leading to potential price volatility with smaller trading volumes. It indicates strong conviction among holders, limiting the circulating supply. Such a standoff can precede upward price movements if demand remains consistent.
Context ∞ Discussions about a Bitcoin supply standoff frequently appear during bull markets or periods of high accumulation by institutions. The debate centers on the long-term price implications of diminishing liquid supply. Observing on-chain metrics related to holder behavior helps understand this market dynamic.
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