Definition ∞ Illiquid supply decrease is a reduction in the quantity of a digital asset that is held in wallets or addresses with a history of infrequent transactions, indicating long-term holding rather than active trading. This phenomenon suggests that long-term holders are selling their assets, thereby increasing the circulating supply available for trade. Such a decrease can signal a shift in market dynamics. It may precede periods of increased selling pressure.
Context ∞ Cryptocurrency news reports often highlight an illiquid supply decrease as a potential bearish indicator. When long-term holders begin to distribute their assets, it can add significant selling pressure to the market. Monitoring this metric helps analysts assess the conviction of established investors and anticipate market corrections.
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