Definition ∞ A BTC supply shock occurs when the available supply of Bitcoin on exchanges or for immediate purchase significantly decreases. This phenomenon is typically driven by strong accumulation from long-term holders or institutional investors, who remove Bitcoin from liquid circulation. When demand remains constant or increases while the readily accessible supply diminishes, it creates upward price pressure. Such a situation can lead to rapid price appreciation as buyers compete for a limited number of coins.
Context ∞ News reports often highlight an impending BTC supply shock as a key indicator for a potential bull market. Analysts closely monitor exchange reserves and on-chain movements to identify conditions that could precipitate such an event. The ongoing debate centers on the sustainability of these supply reductions and their long-term impact on Bitcoin’s market structure.
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