Constrained Selling refers to a market condition where potential sellers are limited in their ability to liquidate assets, often due to lock-up periods, vesting schedules, or regulatory restrictions. This restriction prevents a large volume of assets from entering the market simultaneously, which could otherwise depress prices. Such limitations are common in early-stage crypto projects or following initial coin offerings. It influences supply dynamics by artificially reducing immediate selling pressure.
Context
News reports often highlight upcoming lock-up periods as events that could introduce new selling pressure, affecting asset prices. Understanding constrained selling is crucial for evaluating the true supply-demand balance of a digital asset and predicting future market movements. Regulatory changes or contractual modifications that alter these constraints can significantly impact market liquidity.
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