Distribution pressure refers to the forces that encourage or necessitate the sale of an asset. This can arise from investors needing to liquidate positions due to margin calls, redemptions, or portfolio rebalancing. It can also be influenced by the release of new tokens or the expiration of lock-up periods for existing ones. Such selling activity can exert downward force on an asset’s price.
Context
In cryptocurrency markets, distribution pressure is often observed during periods of heightened volatility or following significant price run-ups. News reports might discuss large holders (whales) moving assets to exchanges, indicating potential selling intentions, or the impact of token unlocks on supply dynamics. Understanding the sources and magnitude of distribution pressure is essential for assessing short-term price trends and potential market corrections. It can signal a shift in sentiment from accumulation to divestment.
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