Demand-Supply Balance

Definition ∞ Demand-supply balance describes the equilibrium point where the quantity of a digital asset sought by buyers equals the quantity offered by sellers. This economic principle dictates the price of cryptocurrencies, as an excess of demand drives prices higher and an excess of supply drives them lower. When demand and supply are balanced, price stability tends to occur. This dynamic is fundamental to understanding market valuations and price movements across digital asset markets.
Context ∞ Crypto news frequently analyzes demand-supply balance to explain price fluctuations and predict market direction. Factors such as new user adoption, institutional buying, or token unlocks can significantly alter this balance. Reports often examine on-chain metrics and exchange order books to assess the current state of demand and supply. A shift in this balance can signal a forthcoming trend change, making it a key analytical point for market observers.