Illiquid Supply

Definition ∞ ‘Illiquid Supply’ represents the portion of a cryptocurrency’s total circulating supply that is not readily available for trading on open markets. This includes assets held in long-term storage, locked in smart contracts, or otherwise inaccessible for immediate sale. A higher illiquid supply can indicate strong holder conviction and may suggest a reduced availability of tokens for speculative trading, potentially impacting price discovery and volatility. Analyzing this metric provides insight into the long-term holder base and potential market depth.
Context ∞ The current discussion regarding ‘Illiquid Supply’ centers on its potential impact on price discovery and market volatility, particularly for assets with significant portions locked or held by long-term investors. A key debate involves distinguishing between truly illiquid supply and assets that are simply dormant but could become available under certain market conditions. Critical future developments to watch for include the rate at which illiquid supply increases or decreases, the specific mechanisms locking up these tokens, and how shifts in this metric correlate with broader market trends or asset-specific news.