Network supply depletion occurs when the total available amount of a digital asset held on exchanges or readily accessible for sale significantly decreases. This reduction often results from sustained accumulation by long-term holders or movement of assets into staking, DeFi protocols, or cold storage. It suggests a tightening of liquid supply.
Context
Crypto news frequently reports on network supply depletion as a bullish indicator, suggesting that selling pressure may diminish and prices could appreciate due to increased scarcity. Analysts monitor exchange reserves and on-chain movements to identify these trends. A consistent reduction in network supply can signal strong investor conviction and a potential shift in market dynamics.
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