Definition ∞ Investor supply absorption describes the market phenomenon where investor demand effectively buys up and holds a significant portion of an asset’s available supply, removing it from immediate trading circulation. This process indicates strong underlying conviction from buyers who are willing to acquire assets at current prices and retain them for the long term. It leads to a reduction in the liquid supply on exchanges. This action can precede upward price movements.
Context ∞ Investor supply absorption is a key on-chain metric often discussed in crypto news as an indicator of market strength and potential future price rallies. When long-term holders or institutions consistently acquire assets, reducing the floating supply, it suggests a healthy demand environment. Analysts monitor this trend to identify periods of accumulation that may precede significant market movements, reflecting a collective belief in the asset’s future value.
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