Definition ∞ Distribution cooling is a market condition characterized by a decrease in the rate of asset distribution or selling pressure. This phenomenon suggests that the supply of a particular digital asset entering the market is diminishing, often indicating that large holders or initial distributors are no longer actively selling. A reduction in distribution can precede periods of price stability or upward movement, as the selling pressure that might suppress price growth subsides. It represents a shift in market dynamics from supply expansion to potential accumulation.
Context ∞ Analysts and news outlets frequently cite distribution cooling as a technical indicator for assessing the health and future trajectory of a digital asset’s price. Reports might highlight on-chain data showing a decline in tokens sent to exchanges or a reduction in miner selling. This observation contributes to market narratives suggesting that a price floor could be forming, or that a period of consolidation is underway before potential appreciation.
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