Definition ∞ On-chain buying power quantifies the total amount of stablecoins or other liquid digital assets held by market participants directly on a blockchain, indicating their immediate capacity to purchase other cryptocurrencies. This metric serves as an indicator of potential demand, as these assets are readily available for deployment into riskier assets. A rise in on-chain buying power suggests an accumulation of capital positioned for market entry. It reflects a readiness to acquire assets.
Context ∞ Analysts frequently monitor on-chain buying power to forecast potential upward price movements in the digital asset market. A significant increase in stablecoin holdings on exchanges, for example, often precedes periods of price appreciation for Bitcoin and other major cryptocurrencies. Understanding this metric provides insight into the latent demand and overall health of the market.
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