Definition ∞ Overhead supply in financial markets refers to a price level where a significant number of investors hold an asset at a loss. These investors are often waiting for the asset’s price to return to their purchase price so they can sell without incurring further losses. This creates a resistance zone where selling pressure tends to increase as the price approaches this level. In the context of digital assets, it represents a concentration of tokens held by participants who bought at higher prices.
Context ∞ Analyzing overhead supply is a common practice in technical analysis of cryptocurrency markets, providing insight into potential price resistance levels. News reports and market commentary frequently reference these zones when discussing price movements and future market outlooks. A large overhead supply can hinder an asset’s upward price momentum, as many holders may exit their positions upon reaching their break-even point.
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