Definition ∞ Market Supply Tightness refers to a condition where the available quantity of an asset for sale in the market is significantly low. This scarcity often results from increased investor holding, staking, or assets being moved into illiquid storage. When supply is tight, even moderate buying pressure can lead to considerable price increases. It is a key indicator of potential upward price momentum.
Context ∞ The discussion surrounding Market Supply Tightness frequently highlights its role as a precursor to significant price movements in digital assets. A key debate involves accurately measuring true supply tightness versus temporary reductions in sell orders. Future developments will focus on more granular on-chain analysis to distinguish between various forms of illiquid supply, providing a clearer picture of market dynamics.
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