Definition ∞ Liquid supply drying describes a market condition where the amount of a cryptocurrency readily available for sale on exchanges significantly decreases. This reduction indicates that fewer holders are willing to sell their assets at current prices. It can suggest a strong holding sentiment among investors and potentially precede upward price movements due to limited supply meeting demand.
Context ∞ Market analysts frequently cite liquid supply drying as a bullish indicator for digital assets, particularly when combined with sustained demand. News reports often track this metric to assess the underlying strength of a cryptocurrency’s market structure and predict future price action.
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