Definition ∞ Market Scarcity describes a situation where the available supply of an asset in the market is insufficient to meet current or anticipated demand. This condition often results from factors like limited issuance, widespread long-term holding, or reduced liquidity on trading platforms. When scarcity intensifies, it can exert upward pressure on prices, as buyers compete for a restricted pool of assets. It is a fundamental economic principle influencing asset valuation.
Context ∞ In cryptocurrency news, market scarcity is a frequently discussed concept, particularly for assets with capped supplies like Bitcoin, where halving events periodically reduce new issuance. On-chain metrics that show assets moving off exchanges or into illiquid addresses are often cited as evidence of increasing scarcity, signaling potential future price appreciation. Understanding market scarcity is vital for analyzing long-term price trends and investment strategies in digital assets.
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