Definition ∞ ‘Market Absorption’ describes the capacity of a market to integrate new supply or demand without significant price distortion. In the context of digital assets, it refers to how effectively the market can absorb new tokens entering circulation or substantial buy/sell orders without causing drastic price fluctuations. A high degree of market absorption indicates a robust and liquid market capable of handling large transactions smoothly. Conversely, low absorption suggests a market susceptible to volatility from significant order flows.
Context ∞ The current discussion around ‘Market Absorption’ in digital assets often pertains to the influx of new tokens from initial coin offerings (ICOs) or large token unlocks. A key debate involves assessing whether current market conditions possess sufficient depth to absorb these new supplies without negatively impacting existing asset prices. Critical future developments to watch for include the volume of upcoming token releases, the buying power of investors to absorb this supply, and the overall liquidity conditions across major exchanges.
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