Definition ∞ A Liquid Supply Shock occurs when a significant portion of a cryptocurrency’s available supply suddenly becomes illiquid or inaccessible for trading. This event typically results from large amounts of the asset being moved into long-term holding, staking, or locked in decentralized finance protocols. A sharp reduction in liquid supply can lead to rapid price increases if demand remains constant or rises. It represents a sudden imbalance between available assets and market interest.
Context ∞ Reports of liquid supply shocks frequently appear in crypto news, particularly for assets with strong community holding or robust staking mechanisms. Analysts monitor on-chain data to identify these events, as they can signal impending volatility and substantial price movements. Understanding these dynamics is crucial for assessing market trends and potential investment opportunities.
Blockchain Knowledge
Cryptocurrency Foundation
Cryptospace Newsfeed
