Definition ∞ Liquidity Absorption describes a market condition where available buy orders are swiftly filled by incoming sell orders, effectively absorbing the supply of an asset without a significant price drop. This indicates strong underlying demand capable of counteracting selling pressure. In cryptocurrency markets, it suggests that there are sufficient buyers at current price levels to take on tokens being sold, maintaining price stability or even facilitating upward movement. This phenomenon is often a sign of underlying market strength.
Context ∞ News analyses often point to Liquidity Absorption as an indicator of market resilience or the accumulation phase of an asset. When observed, it suggests that market participants are actively acquiring assets, preventing deeper price corrections. Understanding this concept is key to interpreting market dynamics and assessing the true demand for a digital asset.
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